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Why Chinese banks are now vanishing
The state is struggling to deal with troubled institutions.
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China’s regulators have been trudging through various reforms and consolidations for years.
PHOTO: REUTERS
The Economist
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The savings and loan (S&L) crisis terrorised America’s banks for years. Starting in the mid-1980s, a mix of aggressive lending growth, poor risk controls and a property downturn contributed to the collapse or consolidation of more than 1,000 small lending institutions. China’s smallest banks are now suffering from many of the same ailments. But until recently, few have collapsed or merged with others.
China’s regulators have been trudging through various reforms and consolidations for years. Since 2019, several mid-tier banks have collapsed. Powerful investment managers and state financiers have melted down. But it is small, rural banks that provide the most complex problem.
