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China - Fitch Rating Service Warns about Banking System and Effect of Off-Balance-Sheet Credit

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  • China - Fitch Rating Service Warns about Banking System and Effect of Off-Balance-Sheet Credit

    Evidently China has an underground economy.

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    Fitch Ratings lowered its outlook on China?s AA- long-term local-currency rating to ?negative? from ?stable,? citing a ?high likelihood of a significant deterioration? in banks? asset quality within three years.

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    Bad loans could rise to 15 percent to 30 percent of the total, with concern at the quality of lending compounded by growth in off-balance-sheet credit, Fitch said.

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    ?Fitch has documented a proliferation of off-balance sheet and other more or less informal channels through which credit is being extended to the economy,? Andrew Colquhoun, head of Fitch?s Asia-Pacific sovereign unit, told a conference call today. ?This gives rise to concerns that the effectiveness of monetary policy may be decreasing.?


    more..

    http://www.bloomberg.com/news/2011-0...vate-debt.html
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