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China debt crunch

China's souring developer loans raise fear of financial contagion

Bank profit turnaround tarnished by surge in property sector NPLs

China's developers are contending with a slew of tougher rules, including curbs on borrowing, leverage and land purchasing.    © Reuters

HONG KONG -- China's crackdown on overextended property developers has led to a surge in loan losses, raising fears of contagion across the nation's $50 trillion financial sector.

Developers enjoyed a return to pre-pandemic profit levels in the first half of the year, buoyed by the nation's economic recovery. Now, however, they are contending with a slew of tougher rules, including curbs on borrowing, leverage and land purchasing, that has sparked a liquidity crisis and missed debt payments.

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