China has avoided ‘systemic financial meltdown and financial crisis’, watchdog chief claims
- Deputy chairman of China Banking and Insurance Regulatory Commission Wang Zhaoxing says ‘banking industry has returned to its base’
- President Xi Jinping made curbing debt one of his top economic policy priorities last year
The risk of a financial meltdown in China’s economy has been largely allayed, a senior industry official said, suggesting the government’s three-year campaign to tackle soaring debt and high-risk lending might be coming to an end.
“The barbaric growth of shadow banking and overheating of real estate financing have been reined in through strengthened supervision,” Wang Zhaoxing, deputy chairman of the China Banking and Insurance Regulatory Commission (CBIRC), said on Monday.
The authorities’ success in bringing both under control had proven wrong those who predicted it “would trigger a systemic financial meltdown and financial crisis”, he said.
Wang’s upbeat comments came despite the government recently ordering banks and other financial institutions to increase their lending to support economic growth amid a deepening slowdown.
Just last year, President Xi Jinping made curbing debt one of his top economic policy priorities.
According to a CBIRC handout, debt levels “stabilised” in 2018 after averaging annual growth of more than 10 per cent over the past decade.
“The banking industry has returned to its base and is focusing on its main business [of making loans] to increase support for the real economy,” Wang said.
Despite his confidence, as Beijing has never announced a specific target for its deleveraging campaign and does not release detailed figures for debt levels by economic sector, there remains debate over the actual scale of the debt problem.