The Chinese Banking Regulatory Commission stated today that it would implement stress tests on commercial banks in China in an attempt to avoid another financial crisis in the future. In other news, the central bank's advisor also stated earlier today that China should keep the stimulus plans to reach full recovery by 2011.
The regulatory commission also said that Chinese commercial banks should have stable funding sources and reduce its dependency on variable liabilities. As a result, they said they would implement stress tests on a quarterly basis.
The commission's decision came two days after the watchdog highlighted in a report that China has been lending at an acceptable rate during the currency quarter. This came after lending during the first nine months of the year reached 8.67 trillion yuan which is approximately $1.27 billion, the issue that may increase credit risk for banks.
Mr. Liu Mengjkang, the Chairman of the Committee, mentioned this week that the Commission will monitor the strict global capital flows for adjusting domestic policy to the level of liquidity in the banking system. In addition, Mr. Liu has noted that the proportion of bad loans in commercial banks in China declined by about 0.76 percentage points from what it was at the end of last year to reach 1.66% at the end of September. It is worth mentioning that Mr. Liu urged the five largest lenders in China on October 16 to increase bad debt write-offs and maintain enough capital.
As for the Chinese central bank advisor, Mr. Fan Gang, he stated that the Chinese government should keep fiscal stimulus spending until next year to reach a full recovery in 2011. Mr. Fan noted that investments in the housing market in China have started to recover, and some manufacturers have started to also to return to normal productivity levels.
Mr. Fan also said that the Chinese government should keep the current trend of stimulus packages to encourage private investments and help recover industries that have yet to start recovering. Although he didn’t specifically mention which industries, he believe the economy needs another year of stimulus spending to reach an 8% growth rate in the upcoming year and build a solid base for full recovery by 2011.
According to him, complications have yet to become evident in the economy since private investment hasn't yet reached the required levels to replace government investments and therefore tightening the monetary policy may result in a slowdown in economic growth. Note that exports are no longer the backbone of the economy after it had slumped 15.2% on an annual basis last September to mark the tenth consecutive decline.
The stimulus plans from the Chinese economy worth 4 trillion yuan or $586 billion alongside eased lending during the first nine months of the year helped support the infrastructure for the third largest economy in the world as government investments and consumer spending took the economy to post a 8/9% growth rate on an annual basis during the third quarter form a previous 7.9% GDP reading during the second quarter. Worth mentioning that the Chinese government is striving to post an 8% growth rate during the current year to provide 9 million jobs for the unemployed.
The Ministry of Human Resources and Social Security of China said Friday that the unemployment rate in urban areas reached 4.3% during the first nine months of this year. The ministry also announced that new jobs that have been provided during the first nine months of the year in urban areas and reached about 8.5 million jobs.
The ministry also stated that the creation of 8.5 million jobs after the economy was able to grow 8.9% during the third quarter, proves how necessary the stimulus plan was in China which helped the economy overcome the negative effects of the global financial crisis.
The regulatory commission also said that Chinese commercial banks should have stable funding sources and reduce its dependency on variable liabilities. As a result, they said they would implement stress tests on a quarterly basis.
The commission's decision came two days after the watchdog highlighted in a report that China has been lending at an acceptable rate during the currency quarter. This came after lending during the first nine months of the year reached 8.67 trillion yuan which is approximately $1.27 billion, the issue that may increase credit risk for banks.
Mr. Liu Mengjkang, the Chairman of the Committee, mentioned this week that the Commission will monitor the strict global capital flows for adjusting domestic policy to the level of liquidity in the banking system. In addition, Mr. Liu has noted that the proportion of bad loans in commercial banks in China declined by about 0.76 percentage points from what it was at the end of last year to reach 1.66% at the end of September. It is worth mentioning that Mr. Liu urged the five largest lenders in China on October 16 to increase bad debt write-offs and maintain enough capital.
As for the Chinese central bank advisor, Mr. Fan Gang, he stated that the Chinese government should keep fiscal stimulus spending until next year to reach a full recovery in 2011. Mr. Fan noted that investments in the housing market in China have started to recover, and some manufacturers have started to also to return to normal productivity levels.
Mr. Fan also said that the Chinese government should keep the current trend of stimulus packages to encourage private investments and help recover industries that have yet to start recovering. Although he didn’t specifically mention which industries, he believe the economy needs another year of stimulus spending to reach an 8% growth rate in the upcoming year and build a solid base for full recovery by 2011.
According to him, complications have yet to become evident in the economy since private investment hasn't yet reached the required levels to replace government investments and therefore tightening the monetary policy may result in a slowdown in economic growth. Note that exports are no longer the backbone of the economy after it had slumped 15.2% on an annual basis last September to mark the tenth consecutive decline.
The stimulus plans from the Chinese economy worth 4 trillion yuan or $586 billion alongside eased lending during the first nine months of the year helped support the infrastructure for the third largest economy in the world as government investments and consumer spending took the economy to post a 8/9% growth rate on an annual basis during the third quarter form a previous 7.9% GDP reading during the second quarter. Worth mentioning that the Chinese government is striving to post an 8% growth rate during the current year to provide 9 million jobs for the unemployed.
The Ministry of Human Resources and Social Security of China said Friday that the unemployment rate in urban areas reached 4.3% during the first nine months of this year. The ministry also announced that new jobs that have been provided during the first nine months of the year in urban areas and reached about 8.5 million jobs.
The ministry also stated that the creation of 8.5 million jobs after the economy was able to grow 8.9% during the third quarter, proves how necessary the stimulus plan was in China which helped the economy overcome the negative effects of the global financial crisis.
