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How to fix China's banking system
China is slowly coming to terms with the bad loans that burden its banking system. Yet its banks continue to make an astounding number of questionable new loans. To stanch the flow, regulators must overhaul China's banking industry by improving its governance and risk management, reducing the state's influence over lending, increasing transparency, and enforcing compliance with global lending guidelines.
The take-away:Cleaning up nonperforming loans is a critical first step in fixing China's banks. To keep the country's financial system healthy, regulators will also have to find ways to reduce the number of new bad loans.
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