China bank bailout calls grow louder

Debt control: A Chinese national flag flutters outside the headquarters of the People’s Bank of China in Beijing. Chinese lenders are said to be grapling with a growing mountain of bad debt. – Reuters

HONG KONG: Predictions of a Chinese banking system bailout are going mainstream.

What was once the fringe view of permabears and short sellers is now increasingly being adopted by economists at some of the world’s biggest banks and brokerages. Nine of 15 respondents in a Bloomberg survey at the end of last month, including Standard Chartered Plc and Commonwealth Bank of Australia (CBA), predicted a government-funded recapitalisation will take place within two years. Among those who provided estimates of the cost, a majority said it will exceed US$500bil.