{"id":14095,"date":"2015-11-03T06:57:06","date_gmt":"2015-11-03T11:57:06","guid":{"rendered":"http:\/\/olduvai.ca\/?p=14095"},"modified":"2015-11-03T06:57:37","modified_gmt":"2015-11-03T11:57:37","slug":"one-analyst-says-chinas-banking-sector-is-sitting-on-a-3-trillion-neutron-bomb","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=14095","title":{"rendered":"One Analyst Says China’s Banking Sector Is Sitting On A $3 Trillion Neutron Bomb"},"content":{"rendered":"

One Analyst Says China’s Banking Sector Is Sitting On A $3 Trillion Neutron Bomb<\/a><\/h3>\n
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To be sure, we\u2019ve long contended that official data on bad loans at Chinese banks is even less reliable than NBS GDP prints. Indeed, the lengths Beijing goes to in order to obscure the extent to which banks\u2019 balance sheets are in peril is truly something to behold and much like the deficient deflator math which may be causing the country to habitually overstate GDP growth, it\u2019s not even clear that China could report the real numbers if it wanted to.<\/div>\n
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We took an in-depth look at the problem in \u201cHow China’s Banks Hide Trillions In Credit Risk: Full Frontal<\/a>\u201d, and we\u2019ve revisited the issue on a number of occasions noting in August that according to a transcript of an internal meeting of the China Banking Regulatory Commission, bad loans jumped CNY322.2 billion in H1 to CNY1.8 trillion, a 36% increase. Of course that\u2019s just the tip of the iceberg. In other words, that comes from a government agency and although the scope of the increase sounds serious, it still translates into an NPL ratio of just 1.82%. Here\u2019s a look at the \u201cofficial\u201d numbers (note that when one includes doubtful accounts, the ratio jumps to somewhere in the neighborhood of 3-4%):<\/p>\n

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Source: Fitch<\/em><\/p>\n

There are any number of reasons why those figures don\u2019t even come close to approximating reality. For instance, there\u2019s Beijing\u2019s habit of compelling banks to roll over bad loans, and then there\u2019s China\u2019s massive (and by \u201cmassive\u201d we mean CNY17 trillion) wealth management product industry which, when coupled with some creative accounting, allows Chinese banks to hold some 40% of credit risk off balance sheet.<\/p>\n

\"\"<\/a><\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

One Analyst Says China’s Banking Sector Is Sitting On A $3 Trillion Neutron Bomb To be sure, we\u2019ve long contended that official data on bad loans at Chinese banks is even less reliable than NBS GDP prints. Indeed, the lengths Beijing goes to in order to obscure the extent to which banks\u2019 balance sheets are […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[130,3108,403,452,7530,669,6876,4318],"class_list":["post-14095","post","type-post","status-publish","format-standard","hentry","category-economics","tag-china","tag-fitch","tag-hong-kong","tag-japan","tag-ratings","tag-reality","tag-shadow-banking","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/14095","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14095"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/14095\/revisions"}],"predecessor-version":[{"id":14097,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/14095\/revisions\/14097"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14095"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14095"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14095"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}