"China's banks are facing serious default risks on more than one-fifth of the Rmb7,700bn ($1,135bn) they have lent to local governments across the country, according to senior Chinese officials. In a preliminary self-assessment, China's commercial banks have identified about Rmb1,550bn in questionable loans to local government financing vehicles - which are mostly used to fund regional infrastructure projects. .A senior official from the CBRC told the FT these loans would not necessarily all go bad but that the country's non-performing loan ratio would almost certainly "increase slightly" at the end of the year .Chinese banks lent a record Rmb9,600bn last year more than double the new loans issued in 2008."
From: FT 26th July 2010
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