IMF Staff Country Reports

People’s Republic of China: Financial Sector Assessment Program-Financial System Stability Assessment-Press Release; Staff Report; and Statement by the Executive Director for the People’s Republic of China

April 30, 2025

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International Monetary Fund. Asia and Pacific Dept "People’s Republic of China: Financial Sector Assessment Program-Financial System Stability Assessment-Press Release; Staff Report; and Statement by the Executive Director for the People’s Republic of China", IMF Staff Country Reports 2025, 100 (2025), accessed May 22, 2025, https://doi.org/10.5089/9798229009560.002

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Summary

The FSSA found that since the last FSAP in 2017, the authorities have made notable progress in strengthening financial supervision and regulation, continuously implementing international regulatory standards, and enhancing systemic risk monitoring. Due to regulatory reforms they also made important reductions, in risks arising from non-bank financial institutions. While bank capital and liquidity levels appear adequate overall, the FSAP concluded that financial stability risks are elevated. Rising vulnerabilities from the property sector downturn and widening strains in highly leveraged local government financial vehicles (LGFV) warrant attention as declining economic growth could affect credit portfolio quality and accommodative monetary policy is weakening banks’ organic profitability, with smaller banks—particularly those with riskier business models—being more vulnerable.

Subject: Commercial banks, Financial institutions, Financial Sector Assessment Program, Financial sector policy and analysis, Financial sector risk, Financial sector stability, Stress testing

Keywords: Bank capital, China development bank, Commercial banks, Emergency liquidity assistance framework, Financial Sector Assessment Program, Financial sector risk, Financial sector stability, FSSA recommendation, FSSA report, Global, LGFV debt pose risk, LGFV debt risk, LGFV risk mitigation, Local government financial vehicles, Mission to the People's Republic of China, Stress testing, Transparency policy, Warrant attention

Publication Details

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