Morgan Stanley turns bullish on Chinese banks after stress test

At the start of this year, China Banking and Insurance Regulatory Commission outlined a series of measures including carving out bad loans, setting up a resolution fund, as well as promoting mergers, capital injections and the restructuring of high risk institutions.

SHANGHAI: China’s broad push to corral risks has put its financial system in the position to withstand even an economic slowdown to about half the pace of the current expansion.

That’s the conclusion of Morgan Stanley after the U.S. bank conducted its own stress tests on China’s vast banking industry, which is struggling with a surge in bad debt amid the slowest economic growth in three decades.