The concerning story behind China's rising bank loans

A unique aspect of China's financial system has been the rapid accumulation of bank deposits over the last decade, but what is the sector's future?

Another more controversial aspect has been the corresponding on-lending of these deposits to a variety of borrowers - some less creditworthy than others. Why have bank loans risen so quickly? After the financial crisis, banks were asked to take on state lending that should have been done by the government directly. These loans have been sitting on bank balance sheets ever since. In 2015, the government recognised the need to take questionable loans off bank balance sheets and convert loans into local government bonds - effectively improving the mix of bank assets. Another unique fa...