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Collapse of China's banking system unlikely

Daryl Guppy
Daryl Guppy7/29/2022 09:43 AM GMT+08  • 5 min read
Collapse of China's banking system unlikely
A protest by hundreds of depositors in Henan province, China, demanding their life savings back after banks froze deposits worth millions of dollars. Photo: CNN Business
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A total of 157 banks went bust in 2010. In the following decade, an average of 22 banks collapsed every year. The banks defaulted on their loans and many depositors lost their life savings. The economy simply shrugged its shoulders and moved on. The banking regulator made sure all bankruptcies were handled according to the letter of the law and infrequently investigated claims of malfeasance.

No, we are not talking about China. These are figures from the United States.

Despite our trust, banks come and go with unsettling regularity but we are often given the impression that this is a problem unique to China. The current banking problems in four rural banks in Henan province and one in neighbouring Anhui are reported as though they are the start of a systemwide banking collapse and proof that the Chinese economy is collapsing.

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