Financial Crime World

China’s Banking Sector Maintains Stability Amid Global Uncertainty

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Despite a year marked by sluggish global growth and slowing economies, China’s banking sector has defied expectations by remaining stable. According to data released by the National Financial Regulatory Administration (NFRA), the total assets of Chinese banks reached 409.7 trillion yuan as of the end of 2023, a 10% increase from the previous year.

Key Developments in 2023

  • The six largest state-owned commercial banks in China - Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China, China Postal Savings Bank, and Bank of Communications - control approximately two-fifths of the total assets, with a combined total of 164.11 trillion yuan.
  • The NFRA replaced the former China Banking and Insurance Regulatory Commission as the primary regulator of the Chinese banking sector, bringing new leadership and policies to the table.

Regulatory Updates

  • Fundamental regulations for fixed asset loans, working capital loans, and personal loans were updated to better align with commercial banks’ credit business trends in China and promote improved credit management and financial services quality.
  • A circular on commercial property loans was issued to support real estate enterprises.
  • Regulations affecting Chinese enterprises borrowing medium and long-term foreign debt were updated.

International Participation

  • The NFRA issued revised implementation measures for administrative licensing of non-bank financial institutions, encouraging international participation in China’s banking sector.
  • Asset access conditions for foreign investors were lowered.

Cyber and Data Risk Management

  • A notice was issued requiring institutions to monitor risks associated with digital cooperation ventures and strengthen their technology risk management practices.

Green Finance

  • The total outstanding balance of green loans reached 30.08 trillion yuan by the end of 2023, a year-on-year increase of 36.5%.
  • Regulators issued several regulations to support the development of green finance, including proposals to integrate green and low-carbon development goals into bank loan criteria.

Conclusion

As China’s economy continues to navigate the challenges of global uncertainty, its banking sector remains a key driver of growth and stability - with regulators working to ensure a robust and secure financial system that supports economic and social development.