China's financial system is weighted down by the rapid growth of shadow banking that is benefiting many sectors including local governments, Fitch Ratings said yesterday.
The agency warned of the risks facing China's banking system and downgraded the country's credit rating on Tuesday due to rising debt problems.
"The banking sector is significantly exposed to the shadow banking because there are all sorts of ties between the banks and shadow credit channels," Charlene Chu, head of China financial institutions at Fitch, said at a teleconference yesterday.
Shadow banking which provides peer-to-peer lending, trust loans and bank acceptance bills accounted for about 60 percent of China's gross domestic product last year, according to Fitch.
Standard & Poor's Ratings Services said earlier that China's shadow banking was worth 22.9 trillion yuan (US$3.7 trillion) by the end of last year and would pose no immediate threat to the country's financial system.
Copyright ©1999-2011 Chinanews.com. All rights reserved.
Reproduction in whole or in part without permission is prohibited.