Fitch has estimated the bad debts volume in the banks of China as $2 trillion

Almaty. September 26. Silkroadnews – Fitch has estimated the bad debts volume in the banks of China as $2 trillion, the Russian newspaper «Kommersant» writes.

«The rating agency Fitch warned the bad debts volume within China's banking system is ten times higher compared to the numbers formally announced by the country's authorities and has already reached a $2-trillion-mark. According to the agency estimates, in case the Chinese authorities do not undertake the due steps in this regard the next two years, the amount of overdue debt may reach a one-third of the country's GDP», the publication said on Saturday.

The agency's estimates show, the share of overdue loans in the banking system of China now stands at 15%-21%, while the official Chinese sources reported 1.8% only at the end of the first half a year of 2016. To settle the bank debts problems accumulated in the banking system immediately, Fitch experts state, it would take China around from $1.1 trillion to $2.1 trillion, i.e. about 11%-20% of GDP. If the Chinese authorities do not proceed to solve this problem within the next two years, the bad debts volumes, Fitch projects, will grow another 10%-13% to reach a third of the country's GDP by the end of 2018.

In Fitch's view, the share of overdue loans in China's banking system will only grow in the near future. Perhaps the state should help banks to solve this problem, though, as the agency expects, such interference can undermine the country's credit rating. Now China's rating, according to Fitch projections, is A+ with a stable outlook.