Exit is not China's biggest challenge, Liu said

Speaking at the 2010 Asian Financial Forum today, the chairman of China's Banking Regulatory Commission said that credit strength in January this year was the effect of last year's credit lag, not necessarily an effective response to demand. Mainland banks play an important role in China's economic growth, Liu said. The banking system has made significant and sustained improvements over the past few years, both in asset quality, return on equity, return on assets and profitability.　　In the future, regulators will strengthen structural adjustment, balance regulation and implement effective regulation at their own pace.　　Last year, China's new loans were 9.5 trillion yuan, an increase of 31.7%, which will continue to control the credit supply this year, with overall control at 7.5 trillion and annual growth of 16% to 18%, Liu said. The growth in Chinese banking lending is the market's concern about non-performing bank lending rates and whether regulators will tighten credit gates. Mr Liu said at the forum that this year would deal with the problem of non-performing loans in the banking sector. But he also said China's banking non-performing loans in 2003 was as high as 17.9% per cent, to 1.58% by the end of last year.　　Still, he thinks China's banking system needs more regulation. He admits that some banks are being asked to limit loans. But the Chinese commercial banks, which have been asked to limit their lending, failed to meet some of the regulatory requirements, including capital adequacy ratios.　　Mr Liu did not name the specific banks that failed to meet the targets, only to point out that the CBRC did not require all Chinese banks to stop lending. "The capital adequacy of each bank is best known to its banking supervisors." Regulators need to strike a balance between avoiding bubbles but not too much resistance.　　"said Liu. The Chinese central bank last week announced a 0.5% per cent increase in the reserve requirement ratio, which was interpreted as a return to the city, and was affected by a major adjustment in the mainland stock market and the Hong Kong stock market. At the Asian Financial Forum, Mr Liu told the outside world that it was not a challenge for China to return to the city and that the real challenge was structural adjustment in the long run. He said 2009 is the most difficult year, 2010 will be the most complex year, China's economic soft landing difficulties, China should stick to its own road map to build a better framework.