Industry Analysis Case Study

Non performing Loans in the Chinese Banking Industry

OR

Abstract:
With non-performing loans (NPLs) constituting 22% of the total loans in state-owned Chinese banks, whose total assets in 2003 amounted to $2,304 billion, a study of the banks' functions seems important. China proposed to open up its banking sector under the World Trade Organisation (WTO) in 2007.

Pedagogical Objectives:

• To discuss the reasons underlying the NPL problem -which include the structure of the Chinese banking system and the peculiarities of the state-directed banking industry
• To discuss the challenges faced by China in tackling the NPL problem.

Keywords : Non-performing Loans (NPL), Bailout, Chinese banking system, Big four, Asset management companies (AMC), Banking reforms, State-owned banks, State directed financial system, Guanxi, Four and five tier classification, Jiang Zemin and Deng Xiaoping, China Construction Bank (CCB), People's Bank of China (PBOC), Industrial and Commercial Bank of China (ICBC), China Banking Regulatory Commission (CBRC)