BAD debts could amount to a third of China's outstanding bank loans, according to a mainland economist.
The country's banks will have dished out loans that total three trillion yuan (about HK$2.73 trillion) by the end of this month, according to the economist's estimates.
Bad debts, which are expected to touch a trillion yuan, are far more than the provision of seven billion yuan for the bad debt reserve allocated by the central bank to the state banks.
Most of the bad debts have been incurred by bankrupt state-owned enterprises.
To help the state banks solve the bad debts problem, the People's Bank of China planned to allocate seven billion yuan to the state banks in 18 cities.
These cities were designated to be pilot cities for ailing state enterprises to declare bankruptcy.
