World Bulletin / News Desk
The International Monetary Fund on Thursday warned of brewing risks in China's banking system as it found dozens of crucial lenders needed to beef up their defences against possible financial crises.
Near the top of the list in the IMF study on the stability of China's financial system is the need for banks to increase their capital to ward off risks from mounting debt.
China has largely relied on debt-fuelled investment and exports to drive its tremendous economic growth, but the Fund said this model has reached its limits.
Part of the problem lies in high growth targets, the IMF said, which incentivise local governments to extend credit and protect failing companies.
"We recommend the authorities to de-emphasise the GDP (growth)," Ratna Sahay, deputy director of the IMF's Monetary and Capital Markets Department, said during a news conference.
China should "incite local governments to strengthen supervision on risks", she added.
Abundant credit allows local governments to hit high growth figures but now each extra dollar of debt is producing diminishing returns.
The ballooning debt -- estimated at 234 percent of gross domestic product by the IMF -- adds financial risk and may weigh on China's future economic growth.
"Credit growth is an important indicator of future financial distress, because lending standards often fall in the rush to make more loans," IMF experts warned in a blog post.
Treasury reports central government debt stock in March rises around 15 pct year-on-year, reaching nearly $235 billion
Sales to foreigners amounted to 1,827, 15.8 pct rise year-on-year, according to official report
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Fresh hopes that Donald Trump and North Korea's leader Kim Jong Un will hold a historic summit within months also provided some much-needed optimism.
The fund cautioned that investors and financial markets expect a steady approach to monetary tightening based on the belief inflation will remain relatively tame.
Turkey's assets abroad go up 2.4 percent at end of February 2018, compared to end of 2017: Turkish Central Bank
BIST 100 decreases 0.12 percent; US dollar/Turkish lira exchange rate stands at 4.1020
Hong Kong and China ended down after fluctuating through the morning on data showing the world's number two economy expanded in January-March at the same rate as the previous three months.
For Turkey, Germany is a very important, indispensable partner: Turkish Energy Minister Albayrak says in Berlin
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The United States, Britain and France carried out attacks at the weekend on alleged chemical weapons facilities, in response to what they say was a toxic gas attack by the Russia-backed Assad regime a week before.
Excluding interest payments, central government budget balance saw surplus of nearly $500M in first quarter of 2018
London's FTSE 100 index fell 0.1 percent to 7,254.83 points, with UK advertising giant WPP diving four percent after chief executive Martin Sorrell resigned over the weekend.
The US, Britain and France carried out attacks at the weekend on alleged chemical weapons facilities, in response to what they say was a toxic gas attack by the Russia-backed Assad regime a week before.