International Monetary Fund identifies financial risks in China

Such firms with weak fundamentals have become a key concern in China as they contribute to debt vulnerability and low productivity, and this issue is seen as one of the main reasons for the rise in corporate debts.

The report said reining in excessive growth would require China to reduce emphasis on high GDP projections in national plans, which have spurred local authorities to set high growth targets.

The country's debt is now equivalent to 234 percent of the country's total output, the International Monetary Fund report showed. The report found that four-fifths of China's banks were vulnerable to shocks, household debt increased by 15% of GDP in the last five years and corporate debt was 165% of GDP.

She added that "implicit guarantees to SOEs [state-owned enterprises] need to be removed carefully and gradually".

The International Monetary Fund (IMF) on Wednesday welcomed China's efforts to contain financial risks and suggested that China could take further measures to improve financial stability.

"The existence of "shadow banking" loans outside the formal banking system, makes it challenging to assess the scale of private sector debt, and China's lagging regulatory system, which mirrors the slow reforms of its legal system, raises doubts over whether there is sufficient capacity to prevent and address a potential financial crisis that may drag the economy into a long slump", Yueh. Local government leaders were aiming to maintain high employment "even if that means cash-bleeding enterprises continue to operate".

More news: International Business Machines (IBM) Raised to Strong-Buy at Vetr
More news: Turkish gold trader testifies he was attacked in U.S. prison
More news: Mario + Rabbids gets a free versus mode tomorrow

It added that the system's increasing complexity "has sown financial stability risks".

At times there had been pressure to keep struggling firms open rather than allowing them to fail - a policy that could conflict with financial stability, it added. "Credit growth has outpaced GDP growth, leading to a large credit overhang".

There had also been growth in increasingly complex investment vehicles while risky lending had been moving away from banks to less well-supervised parts of the financial sector.

China's central bank, the People's Bank of China, said overall a series of reports published by worldwide bodies including the IMF were "professional and valuable assessments".

"The descriptions of the stress testing did not fully reflect the outcomes of the test", the People's Bank of China said on its website.

Related Articles

  • Ishares Core MSCI EAFE IMI Index ETF (XEF.TO): Tracking the Technicals

    Ishares Core MSCI EAFE IMI Index ETF (XEF.TO): Tracking the Technicals

    Looking at some alternate time periods, the 12 month price index is 1.22987, the 24 month is 1.22434, and the 36 month is 1.32894. Investors look at the Volatility 12m to determine if a company has a low volatility percentage or not over the course of a year.
    Ireland U21 global  handed Everton debut in this evening's Europa League game

    Ireland U21 global handed Everton debut in this evening's Europa League game

    Allardyce, 63, was appointed Everton manager on 30 November and his only game in charge has been the 2-0 win against Huddersfield on Saturday.
    Getting The Flu Shot Is Still Your Best Protection

    Getting The Flu Shot Is Still Your Best Protection

    Flu shots are available throughout Chatham-Kent from a family healthcare provider, walk-in clinic or many local pharmacies. According to the Centers for Disease Control and Prevention, several strains of influenza virus are in circulation.
  • 'Overwatch's' Winter Wonderland Event Returns Next Week

    'Overwatch's' Winter Wonderland Event Returns Next Week

    You'll get a good long look at the newly winter-ised Black Forest during the return of Mei's Snowball Offensive brawl. When the Yeti is defeated, the group of Meis wins, whereas if a certain number of Meis die, the Winston player wins.
    Morgan Stanley Fires Former Dem Rep. Harold Ford Jr

    Morgan Stanley Fires Former Dem Rep. Harold Ford Jr

    She also produced emails from Ford that ended with her asking him to stop contacting her and Ford apologizing and agreeing not to. The email, which was reviewed by HuffPost , shows that the woman emailed Ford after he repeatedly asked her to drinks.
    Here's what Starbucks' Christmas Tree Frappuccino really tastes like

    Here's what Starbucks' Christmas Tree Frappuccino really tastes like

    TODAY tried the beverage on Thursday morning but the finishing touches apparently weren't available at our local Starbucks yet. This writer drove to two Starbucks early hoping she could convince a kind barista to make her one before the official launch.
  • Timeline Of The Escape And Capture Of Eric C. Conn

    Timeline Of The Escape And Capture Of Eric C. Conn

    Ned Pillersdorf, an attorney representing many of Conn's former clients, has said Conn caused a "true humanitarian crisis". Pillersdorf said those hearings are almost complete, and about 700 have been found eligible to maintain the benefits.
    Auto  hits pedestrians in lower Manhattan, NYPD says

    Auto hits pedestrians in lower Manhattan, NYPD says

    This is a developing story; check back for updates and get the PIX11 News app to stay informed all day . The crash happened at Broadway and Liberty Sts, near Zucotti Park about 1.20pm local time.
    NRA hails the House's passage of Concealed Carry Reciprocity Act

    NRA hails the House's passage of Concealed Carry Reciprocity Act

    Richard Hudson's (R-NC) national reciprocity legislation passed the House and was headed to the Senate . Beto O'Rourke (D-TX) opposed the bill for a similar reason.
  • EPS for Red Hat, Inc. (RHT) Expected At $0.50

    Red Hat, Inc . ( RHT ) has shown a upward trend during time of recent session. 31 funds opened positions while 55 raised stakes. The firm earned "Buy" rating on Friday, June 9 by Janney Capital. (NYSE: RHT ) on Monday, August 14 with "Hold" rating.
    David Cassidy Completely Cuts Daughter Katie Cassidy Out Of His Will

    David Cassidy Completely Cuts Daughter Katie Cassidy Out Of His Will

    In the documents, David wrote: 'It is my specific intent not to provide any benefits hereunder to Katherine Evelyn Cassidy'. The will was originally filed in 2004 and named his then-wife, Susan, as the personal representative under the will.
    LaVar Ball Makes It Official: LaMelo Won't Honor UCLA Commitment

    LaVar Ball Makes It Official: LaMelo Won't Honor UCLA Commitment

    The boys' father said several teams in Asia and Europe have expressed interest. "I think it is a good decision", Lonzo Ball said. LiAngelo , who was a freshman at UCLA this year, is in the process of leaving the school at his father's request.