Chinese Financial Authorities "Expand Support for Banks and Small Businesses Facing Non-Performing Loans and Funding Difficulties"

[Asia Economy Reporter Kim Eunbyeol] Chinese financial authorities have outlined this year's policy direction to expand support for banks and small businesses facing difficulties due to non-performing loans and liquidity shortages.

According to Bloomberg on the 6th, the People's Bank of China and financial regulatory authorities have disclosed detailed measures to address financial system risks amounting to $45 trillion (approximately 5,260 trillion KRW) as they enter the new year.

First, the China Banking and Insurance Regulatory Commission (CBIRC) announced that it will simultaneously cut non-performing loans, establish a resolution fund, and promote mergers and acquisitions, capital injections, and restructuring of high-risk financial institutions.

The CBIRC also declared its intention to continue cracking down on shadow banking activities that evade financial authorities' surveillance by disguising themselves as investments. It plans to improve financial risk management in the real estate sector as well. In particular, it stated that it will enhance risk management in related areas by preventing speculative housing transactions and blocking illegal funds from entering the real estate market.

In this regard, the People's Bank of China also announced the previous day that it will establish a long-term regulatory system to more closely monitor the inflow of funds into the real estate market. The People's Bank pledged to strengthen frontline support for local governments.

Zhao Jian, head of Atlantis Financial Research in Beijing, commented, "Regulatory authorities spoke in a strong tone, saying they will implement very specific and extreme measures," interpreting this as "a signal from regulators to intensify efforts to curb financial risks this year."

China's economy fell to its lowest level in 30 years last year, and financial risk management is expected to become more sophisticated and organized going forward. More than 3,000 local banks and rural banks, which are the epicenter of China's financial risks, are struggling with non-performing loans, liquidity issues, and weak internal controls.

This content was produced with the assistance of AI translation services.