As of the end of October 2023, the total loans on the books of national financial institutions stood at 235 trillion yuan, with bonds purchased totaling 64 trillion yuan, amounting to 300 trillion yuan combined. Officially, the recognized bad debt rate is 1.8%. However, considering that a large portion of local government bonds cannot be repaid—estimating a 50% bad debt rate for these and a 10% rate for corporate loans—the financial sector’s bad debts amount to 56 trillion yuan.
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$8 Trillion in Bad Debt Reveals Systemic Risks in China’s Banking Sector, Financial Tsunami Looming
