cross-posted from: https://feddit.org/post/860815
The Chinese banking sector is facing a severe crisis. In just one week, 40 banks disappeared, and the collapse of Jiangxi Bank has further deepened the sector’s problems.
Cryptocurrency market analyst Sigma G also examined the situation in China’s banking sector. He points out that the leading cause of the problems is the deep recession in China’s real estate sector. Over-indebted developers and local governments fail to repay loans, leading to financial instability. Property prices have plummeted, and construction projects have been halted, further burdening the economic system.
The author also highlights the issue of hidden bad debts. Banks have used asset management companies (AMCs) to offload toxic loans, creating an illusion of stability. However, a new banking regulator, the National Financial Regulatory Administration (NAFR), has begun cracking down on these practices by imposing fines and increasing oversight.
Many Chinese cities and even entire regions are drowning in debt. The liabilities were so high that local government representatives sent envoys to Beijing in the spring. They are negotiating terms for repaying billions in loans. Unpaid debts are increasingly weighing on regional economies, threatening national economic growth.
Something something history repeats itself something japanese housing bubble, 2008 subprime crisis, something
Not that this article seems like the most trustworthy, but this has been an ongoing problem for China since 2020, thanks mostly to Evergrande and the whole housing crisis (prices are sky high, people can’t afford to buy, company relied on new sales to finish ongoing constructions and now can’t finish them, shit collapses).
Related - (May 2024) The Chinese govt is buying unsold property in order to keep the economy under control.