Bad loans getting worse
1 June 2002
Chinese banks' percentage of non-performing loans is twice the 25-30 per cent estimated by the central bank and the banks themselves are making the problem worse, according to a report issued in May by international ratings agency Standard & Poor's.
The agency said that domestic credit increased dramatically in the second half of the 1990s, from 87 per cent of the real gross domestic product in 1995 to 117 per cent in 1999. Government attempts to overhaul the banking system are hampered by the banking system itself, which is characterised by poor asset quality, meagre profitability, low capitalisation and inadequate regulatory supervision.