40 banks were closed in one week in China
China's credit-driven development has finally stopped growing and is becoming a serious threat to the country's and the world economy. In one week, 40 banks were closed in the country, and another 3,800 financial institutions are on the verge of bankruptcy. Most of them gave loans to manufacturers and local governments.
China's banking sector is going through a serious crisis. In one week, 40 banks closed, and the collapse of Jiangxi Bank of China added to the complex situation in the sector. Experts warn that the situation may have serious consequences for the world economy.
The Renminbao portal reported that Jiangxi Bank of China was raided by customers worried about bankruptcy rumours. The bank previously reported that its profits could fall by 30 percent due to problems with customer payments.
According to The Economist, about 3,800 banks in China are on the verge of bankruptcy. Their total assets are 5.7 trillion dollars or 13% of the country's banking system. The magazine notes that these banks have been mismanaged for a long time, accumulating a lot of bad loans.
The article says that many of them were caught in the real estate crisis by lending to developers and local governments. The authors note that in recent years some banks have found that 40% of their portfolios are made up of non-performing loans.
"The years of credit-driven growth are finally over, and China's slowdown and negative impact on the global economy will be the result. The slowdown in the growth of the Chinese economy, in turn, will make their banking problems even worse," warns the interviewee of The Economist.
Many Chinese cities and even entire regions are drowning in debt. The commitments are so great that local government officials sent an ambassador to Beijing in the spring. Unpaid debts are increasingly threatening the regional economy and national economic growth.
The debt that is sinking China's cities is primarily the result of the real estate crisis and the pandemic.
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