'Speed up reform', Moody's to China
assets doubled in the past four years, leaving them exposed to industries now mired in excess production capacity.
Total assets in China's banking system are now worth 240 percent of the country's gross domestic product at 113.3 trillion yuan ($18.2 trillion), substantially higher than any other major emerging economy, Moody's said.
As a result, the agency judged Chinese bank asset quality to be negative for the next 12-18 months, even though it assessed the banking system to have a stable outlook in the period.
China's stabilising economic growth has arrested the uptick in its banks' bad loan ratio, Moody's said, and there are no indications that asset quality will worsen materially in coming months.
DOUBTS OVER BAD DEBTS
China's four biggest state-owned banks which control about half of the country's total bank assets all have non-performing loan ratios of below 1.5 percent, drawing criticisms from analysts who say the numbers are too low and not to be trusted. Christine Kuo, vice president of Moody's Financial Institutions Group, said while the agency too has its concerns about China's bad loan data, it cannot prove that the numbers are false.
We have our concerns, but we have no evidence, Kuo said.
For state-owned enterprises, the economic slowdown will impact different sectors differently, said Kai Hu, vice president for corporate finance at Moody's.
Strategic sectors such as oil and natural gas production and the power grid will hang onto their monopolies, but consolidation measures recently announced by the government will be a blow to
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