In recent years, China has clamped down on shadow banking, concerned about the hidden risks in the high volume of complex and potentially risky loans in the sector. But as a weakening economy puts pressure on businesses and individuals, authorities fear shadow lending and illegal loans might surge. Due to the coronavirus epidemic, leverage is expected to rebound significantly in the Chinese economy this year, and bad debts of financial institutions may rise substantially, he warned. Financial institutions should dispose of non-performing assets as early as possible, and covering up would only bring serious consequences, Guo said. Outside of China, external factors could also threaten financial security, Guo said.

Source: The Standard August 16, 2020 13:18 UTC