{"id":3529,"date":"2026-07-23T18:32:47","date_gmt":"2026-07-23T18:32:47","guid":{"rendered":"https:\/\/trusteconomics.eu\/?p=3529"},"modified":"2026-07-23T18:32:47","modified_gmt":"2026-07-23T18:32:47","slug":"china-8-1-trillion-in-losses-in-the-worlds-largest-banking-system","status":"publish","type":"post","link":"https:\/\/trusteconomics.eu\/index.php\/2026\/07\/23\/china-8-1-trillion-in-losses-in-the-worlds-largest-banking-system\/","title":{"rendered":"China: $8.1 trillion in losses in the world’s largest banking system"},"content":{"rendered":"\r\n\r\nChina\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.\r\n\r\n \r\n\r\nOfficially, \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.\r\n\r\n \r\n\r\nIn a recent report, Trust Economics<\/a> contrasts the official Chinese figures with historical real estate crises in other major economies:\r\n\r\n \r\n\r\nIn the US in 2008, NPLs peaked at 5.6%.\r\n\r\n \r\n\r\nIn Spain, they reached 13.8%.\r\n\r\n \r\n\r\nIn Ireland, they exceeded 26%.\r\n\r\n \r\n\r\nNo major housing crisis has ever produced such low levels of \u201cred\u201d loans as the 1.52% that China is reporting today.\r\n\r\n \r\n

The hidden losses<\/strong><\/p>\r\n \r\n\r\nApplying historical proportions, Trust Economics estimates that the hidden losses of Chinese banks range between $5.5 trillion and $8.1 trillion.\r\n\r\n \r\n\r\nIf trusts, insurance companies, the Belt & 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.\r\n\r\n \r\n\r\nAgainst 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.\r\n\r\n \r\n

The \u201cChinese scam\u201d and GDP<\/strong><\/p>\r\n \r\n\r\nThis system hides the losses, while simultaneously inflating GDP.\r\n\r\n \r\n\r\nWith investments reaching 40% of the economy and the country in deflation, the official growth of \u201c+5%\u201d raises serious mathematical doubts.\r\n\r\n \r\n

A Japanese-style \u201clost decade\u201d<\/strong><\/p>\r\n \r\n\r\nIt 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.\r\n\r\n \r\n\r\nThe 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.\r\n\r\n \r\n\r\nThe question is how much longer can this game last and what the global implications will be when the bubble begins to deflate abruptly.\r\n\r\n","protected":false},"excerpt":{"rendered":"

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. 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 … <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1127,105,59],"tags":[627,52,1226],"class_list":["post-3529","post","type-post","status-publish","format-standard","hentry","category-china","category-developed-economies","category-proposed-fiscal-policies","tag-banking-system","tag-china","tag-losses"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t