Risks to China financial system reach highest level

Baku. 6 November. REPORT.AZ/ China’s financial sector is and will be in a period with high and easy-to-break-out risks. 

Report informs referring to the RIA Novosti, governor of People's Bank of China (Central Bank of China) Zhou Xiaochuan said.

“The general situation in Chinese financial sector is sound, but it is and will be in a period with high and easy-to-break-out risks", the said in a statement on the website of the People's Bank of China.

He said latent risks are accumulating, including some that are hidden, complex, sudden, contagious and hazardous which makes financial system more vulnerable: “Main issue is prevention of arising events that are hardly predictable and complex to forecast”.

Main risks connected with liquidity, corporate loans, debts of self-governing institutions and ‘shadow’ bank system. Xiaochuan said state institutions borrowed huge loans and delay is observed in paying off the debts by some institutions. “The volume of toxic loans in banking sector increased that hits bank’s capital adequacy and make the makes them more vulnerable to risks.

Analytical Group of Report News Agency states that the financial system problems in China will lead to eventual increase of US-dollar rate. 6,4390 CNY/USD rate on September 7 increased by 3,1% and now reached 6,64 CNY/USD. However, current level of rate is 4,6% lower than 6,9640 CNY/USD rate that was registered in the first working days in 2017.

Analytical Group predicts that by late 2017, yuan will lose its value for 2-3% and reach 6,80 CNY/USD rate.