{"id":29847,"date":"2026-07-23T21:12:47","date_gmt":"2026-07-23T18:12:47","guid":{"rendered":"https:\/\/www.liberalglobe.com\/?p=29847"},"modified":"2026-07-23T21:12:47","modified_gmt":"2026-07-23T18:12:47","slug":"china-8-1-trillion-in-losses-in-the-worlds-largest-banking-system","status":"publish","type":"post","link":"https:\/\/www.liberalglobe.com\/?p=29847","title":{"rendered":"China: $8.1 trillion in losses in the world&#8217;s largest banking system"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">China\u2019s banking system is the largest in the world, with assets of $70.3 trillion \u2013 more than those of the US and the European Union combined.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Officially, \u201cnon-performing loans\u201d (NPLs) do not exceed 1.52%. However, the reality of the Chinese economy \u2013 with house prices having fallen by 23% since 2021, new prices falling for 35 consecutive months and 75-80 million homes remaining unsold \u2013 raises serious doubts about the reliability of these figures.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In a recent report, <a href=\"https:\/\/trusteconomics.eu\">Trust Economics<\/a> contrasts the official Chinese figures with historical real estate crises in other major economies:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In the US in 2008, NPLs peaked at 5.6%.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In Spain, they reached 13.8%.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In Ireland, they exceeded 26%.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">No major housing crisis has ever produced such low levels of \u201cred\u201d loans as the 1.52% that China is reporting today.<\/p>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\"><strong>The hidden losses<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Applying historical proportions, Trust Economics estimates that the hidden losses of Chinese banks range between $5.5 trillion and $8.1 trillion.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">If trusts, insurance companies, the Belt &amp; Road Initiative and fiscal costs are included, the total loss to the financial system could reach $8.1 trillion \u2013 about 39% of Chinese GDP in the base case.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Against this size, the annual profits and provisions of banks cover only $1.28 trillion, while the state recapitalizations to date ($74 billion) are a drop in the ocean.<\/p>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\"><strong>The \u201cChinese scam\u201d and GDP<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This system hides the losses, while simultaneously inflating GDP.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">With investments reaching 40% of the economy and the country in deflation, the official growth of \u201c+5%\u201d raises serious mathematical doubts.<\/p>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\"><strong>A Japanese-style \u201clost decade\u201d<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It is estimated that the Chinese government has chosen the mild adjustment scenario today, which reflects a \u201cJapanese-style slow deflation\u201d: a lost decade, erosion of the yuan in real terms and constant pressure on commodities and global demand.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The conclusion is clear: There is the world\u2019s largest bubble. In China, even the \u201cbursts\u201d are state-planned \u2013 slowly, quietly and with the bill ultimately ending up with depositors and society.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The question is how much longer can this game last and what the global implications will be when the bubble begins to deflate abruptly.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>China\u2019s banking system is the largest in the world, with assets of $70.3 trillion \u2013 more than those of the US and the European&#8230;<\/p>\n","protected":false},"author":1,"featured_media":29848,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5,961],"tags":[5043,161,1268,3734,2191],"class_list":["post-29847","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economic","category-financial-economics","tag-banking-system","tag-china","tag-npls","tag-red-loans","tag-trust-economics"],"_links":{"self":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts\/29847","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=29847"}],"version-history":[{"count":1,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts\/29847\/revisions"}],"predecessor-version":[{"id":29849,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts\/29847\/revisions\/29849"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/media\/29848"}],"wp:attachment":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=29847"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=29847"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=29847"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}