China's financial system is at risk: IMF

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China's financial system is at risk: IMF

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The International Monetary Fund warned China's banks face growing risks that might hamper growth.

15 November,2011 08:48 pm

Chinas financial system is at risk from bad loans, booming private lending and sharp falls in property prices, the International Monetary Fund warned Tuesday, as it called for sweeping reforms.In its first formal evaluation of Chinas financial system, the Washington-based lender blamed heavy government involvement in the countrys banks and watchdogs for reducing market discipline and corporate governance.The fund also called on Beijing to relax its control of the yuan currency and allow the central bank more freedom over policy decisions.Rampant lending since the 2008 financial crisis has left many companies and local governments in China with huge debts, while a recent slowdown in economic growth and falling property prices have fuelled fears of an explosion in defaults.