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China banks' shadow assets exceed Mexico's economy

Midsize lenders squeezed by higher interbank borrowing costs

Agricultural Bank of China, which is headquartered in Shanghai, had the highest nonperforming loan ratio among the nation's major banks in the first quarter. (Photo by Kenji Kawase)

HONG KONG -- It may be too soon to say that glimmers of hope can be seen in the quality of Chinese bank assets, considering they have off-balance-sheet assets that are collectively larger than the world's fifteenth-largest economy.

The country's six biggest commercial banks revealed this week that their off-balance-sheet assets -- likely held through trusts and wealth management products -- were worth 7.78 trillion yuan ($1.13 trillion) as of March -- more than Mexico's 2016 nominal gross domestic product of $1.06 trillion, or about a tenth of China's economy.

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