Banking industry’s net external assets at $166.5bn

China’s banking sector saw its net external assets valued at US$166.5 billion at the end of 2022, according to new data released on Thursday. The State Administration of Foreign Exchange stated that external financial assets reached US$1.519 trillion, while external liabilities amounted to US$1.352 trillion. Deposits and loans accounted for 65% of external financial assets, reaching US$988.3 billion, while bonds made up 22% at US$330.4 billion. Additionally, 62% of the total external financial assets were US dollar assets, with US$938.4 billion, and 19% were RMB assets, with US$294.4 billion.

In terms of external liabilities, deposit and loan liabilities were at US$760.6 billion, accounting for 56% of external liabilities. Bond liabilities amounted to US$230.7 billion, accounting for 17% of external liabilities. The State Administration of Foreign Exchange’s data comes amid a difficult time for China’s banking industry, with the government’s recent crackdown on financial corruption. Additionally, Chinese regulators have recently approved rules requiring domestic and overseas banks to separate their custodian banks’ and commercial banking businesses, with the hope of improving risk management in the industry.

China’s banking sector has seen major growth in recent years, but the government is now seeking to tackle its increasing financial risks. To address these risks, regulators have implemented various policies to control the banking industry, including limiting the growth of interbank borrowing and increasing scrutiny of shadow banking activities. Additionally, in recent months, regulators have increased their scrutiny of overseas investments by Chinese companies, and have tightened controls over the country’s currency outflows. Despite these challenges, China’s banking sector remains a key player in the global financial market.