The spectre of Chinese NPLs

Author: | Published: 27 Mar 2018

Bad loans continue to haunt China. Getting rid of them for good is no easy task

China has been haunted by non-performing loans (NPLs) ever since 2011. Official figures stand at $256 billion but the real number could be higher. In comparison, NPLs in Greece, one of Europe's worst performers for a few years when it comes to bad debt, stand at €75 billion ($93 billion approximately).

Figures for China are staggering: the IMF estimates the country's non-financial sector debt will exceed 290% of GDP by 2022 while the China Banking Regulatory Commission (CBRC) reports that the NPL ratio of commercial banks stood at nearly two percent at the end of 2017. China's financial regulators have been sounding alarm bells on sour loans for a while now and an array of measures have been put in place to target corporate debt, manage shadow banking and stimulate the implementation of workable...