Where is the Chinese banking system heading?
Bruegel hosted a lunchtalk discussing the Chinese banking system. The presentation by Alicia Garcia Herrero was followed by an open discussion chaired by André Sapir. After some wonderful years in terms of growth and profitability, there are three main sources of risk for China’s banking system. The first is the hang-over of the fiscal stimulus […]
After some wonderful years in terms of growth and profitability, there are three main sources of risk for China’s banking system. The first is the hang-over of the fiscal stimulus package, which has been intermediated by the banking system. Such lending has concentrated on local governments’ financing vehicles, whose revenues are very dependent on the prices of land and housing in general. The second is China’s housing bubble and its relation to the banking system. The third is the sudden rise in shadow banking and how it is affecting the formal banking system. How important these risks are and whether they will materialise depend, among other issues, on the external environment which China will be facing in the next few years.
Alicia Garcia Herrero, is Chief Economist for Emerging Markets at Banco Bilbao Vizcaya Argentaria (BBVA) and adjunct professor at the Lingnan University (Hong Kong). She is also a member of the advisory board of the Hong Kong Institute of Monetary Research and advisor to the European Commission on China issues.
André Sapir, Senior Fellow at Bruegel and Professor of Economics at Université Libre de Bruxelles (ULB)
Alicia Garcia Herrero, presentation – Can a successful bank restructuring
end in tears? The case of China here
Summary of the event here