Chinese banks will see their non-performing loans increase due to the US subprime mortgage crisis and domestic economic cooling measures enforced by the government, state media reported Tuesday.
"The non-performing loan ratio in the banking industry and risks of volatility in the capital market are both rising," the Financial News reported, citing Zhong Wei, an economist with Beijing Normal University.
The newspaper, which is run by the central bank, said small and medium-sized lenders were facing more pressure compared with their larger peers.
The non-performing loan ratio of 16 major commercial lenders fell to 6.7 percent at the end of 2007 from 7.5 percent a year earlier, according to the China Banking Regulatory Commission.
Chinese share prices lost 4.07 percent Tuesday morning after a tumble of more than five percent Monday, amid growing global fears of a recession in the US economy.
Refreshed worries about the impact of a mortgage default crisis and subsequent credit crunch in the US also shook European financial markets overnight and Asia-Pacific markets like Japan and Australia.
