China closes record number of banks as economic growth slows

China closed a record 670 banks last year, or nearly one in four lenders, as Beijing pushes to de-risk amid slowing economic growth.

Nearly all were rural banks, which “remain the weakest part of the system, with poor asset quality, low capitalization, and governance shortcomings,” Fitch wrote.

After a massive credit expansion drove growth, “the financial system’s problems now constrain that growth,” a Rhodium Group expert told ChinaTalk.

The closures were likely geared toward “eliminating the potential for liquidity events among small institutions,” a Singapore-based expert told the Financial Times.

Despite having “wowed the world with its electric cars, dancing robots, and choreographed drones,” China’s economy has undershot projections, partly due to weak consumption, The Economist wrote.