As China’s major banks clean up their balance sheets before a series of listings in Hong Kong this year, there are fears that a wave of bad loans will emerge to threaten the country’s fragile financial system.
Chinese banking regulators and financial analysts warn that the rapid growth in new lending while the economy boomed over the past two years has the potential to turn sour if overheated sectors of the economy begin to slow.
Bank lending expanded by about 20 percent a year over the two years to the end of 2004, a period when annual economic growth exceeded 9 percent, according to government statistics.
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