ABSTRACT
China’s banking system has been struggling with a staggering amount of non-performing loans (NPLs). The risk of a rise in NPLs, coupled with corporate vulnerability and inefficient insolvency system, could lead to a surge of firm failure and cause world trade disruptions. After a brief introduction, Section 2 offers a review of China’s NPLs market involving the definition of NPLs in international instruments and that in Chinese law and the severity of the NPLs problems in China. NPLs disposal channels are discussed in Sections 3 to set the ground for analysis of China’s NPLs disposal policies in Section 4. Section 5 sheds light on the regulatory tendencies of the Chinese authorities following the US–China Trade Deal and the underlying legal, economic, and political considerations. Section 6 provides a conclusion.
