The banking regulator has stressed that China’s financial system is in an “extremely stable” condition amidst ongoing efforts to deleverage the economy as well as uncertainty surrounding trade frictions with the US.
“At present China’s financial system, whether we look at capital adequacy ratios, repayment capability or liquidity, is extremely stable,” said Xiao Yuanqi (肖远企), head of the macro-prudential regulatory department of the China Banking and Insurance Regulatory Commission (CBIRC). “Certain external shocks will not be able to affect our curbing of malfeasance.”
According to CBIRC moderate loan growth has kept market rates essentially stable, while total social financing is seeing a decline amidst stability, providing a solid support for improvements to the national economy.
The latest data from CBIRC indicates that as of the end of May China’s banking sector financial institutions had a domestic and foreign currency loan balance of 133 trillion yuan, for a year-on-year rise of 12%.
CBIRC data further indicates that the Chinese insurance sector provided risk guarantees worth 3115 trillion yuan to the growth of the real economy, as well as provided financing to the real economy in excess of 10 trillion yuan.
With regard to real estate loans, local government debt, online finance and other major sources of systemic risk, China’s financial regulators have indicated that they will use methods including pressure tests to stage “early interventions, and effectively contain risk accumulation.”