In comparison to the western subprime lending crisis, Chinese banks are facing more domestic credit risks. They will be greatly pressured to maintain the quality of their established assets as macroeconomic controls continue to strengthen in China. The rate of non-performing loans in China's banking industry has risen, according to a report issued by the Standard & Poor's Ratings Services yesterday.

Credit retrenchment will change the business environment of some companies and then further influence their capacity to generate loans. With economic fluctuations in China and throughout the world, the export and real estate sectors are expected to spend more on operational costs, bringing high risks to the banking industry if these enterprises don't improve their price fixing capabilities, said Liao Qiang, vice president of the Standard & Poor's Ratings Services.

For more details, please read the full story in Chinese (http://www.cs.com.cn/xwzx/03/200802/t20080222_1373938.htm).

(China.org.cn February 22, 2008)