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Gloomy Western bears are wrong about China's banks

Beijing’s new banking regulator faces pressing issues, but no dramatic shakeup is needed

| China

For years, mainstream foreign media and investment analysis has revolved around a largely gloomy narrative that describes Chinese banks as rickety, and awash with bad debt. In this narrative, it is just a matter of time before a banking crisis jolts the Chinese economy off course.

The failure of these dire forecasts to materialize has not deterred the skeptics. Each year they identify new problems that they predict will bring down the banking system. But does Guo Shuqing, recently appointed the third chairman of the China Banking Regulatory Commission, really face a potential banking crisis? And what reforms of the banking system are really needed?

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