A survey of senior Asian executives has found that most expect some of the money lent out through China's mammoth stimulus package may never be recovered.
Almost two-thirds of 300 senior executives polled in a Deloitte survey said they expected more than 5 per cent of newly approved bank loans from the 4 trillion yuan (HK$4.67 trillion) stimulus package to become non-performing loans. Almost 30 per cent expected the non-performing ratio to be higher than 16 per cent.
Survey respondents also said they considered a consumer credit crisis and possible systemic failure of the banking system overseas as some of the most imminent threats to China's economic development.
But overall, the poll found greater optimism about the mainland's economic recovery than Hong Kong's. They also remained bullish on the mainland property sector with almost 75 per cent of respondents expecting property prices to stay at the present level or to rise further.
Darach Haughey, principal of Deloitte's reorganisation services, said Deloitte began conducting the survey in September before China's latest austerity measures.
Respondents were also upbeat about local stock markets. About 63 per cent of respondents consider that the Shanghai Composite Index will trade between 2,500 to 3,499 points. Around 60 per cent expect the Hang Seng Index to fluctuate between 20,000 and 24,999 points.