Bad loans stabilize, capital flight eases: PBC official

Nonperforming loans ( NPL) in China have stabilized and pressure from capital flight has eased, Yi Gang, deputy governor of the People’s Bank of China ( PBC), said in New York on Monday ( US time), the Xinhua News Agency reported.

Yi made the remarks at the International Finance and Infrastructure Forum in New York. While acknowledging that China’s financial market still faces different types of risks, he said that “the overall risk is under control.”

“Nonperforming loans are mostly stabilizing after a long time of climbing,” said Yi.

The NPL ratio declined in the fourth quarter of 2016, the first time since 2012, suggesting that the loan losses that have posed risks to the country’s financial market are finally easing.

As of the end of 2016, lenders’ NPL ratio was 1.74 percent, slightly down from 1.76 percent a quarter earlier.

“The capital outflow pressure has been alleviated recently but still we have to keep an eye on the phenomenon and see what the underlying reason is,” Yi said.

He also pledged to improve shadow banking regulation and transparency and monitor NPLs, capital outflow and divergent movement of urban housing prices to prevent sys- temic risks.

China has made great efforts to open up its financial market and it will further open up its bond market to foreign investors along with the internationalization of the yuan, the deputy governor said.

“As of the end of last year, there were more than 400 foreign institutions investing in China’s interbank bond market with a total amount of more than 800 billion yuan ($ 116.17 billion),” Yi said.