"The financial crisis has had a limited impact on the Chinese banking system and the risks are under control," China Banking Regulatory Commission chairman Liu Mingkang told a briefing in Beijing.

"Our banking system so far remains sound and stable, although China cannot be immune from the global crisis."

The bad, or non-performing loan ratio for China's banks dropped 3.71 percentage points to 2.45 percent at the end of 2008, Liu said.

His reassuring comments about the situation in China were in contrast to the turmoil that banks around the world have experienced since the economic crisis erupted last year.

Nevertheless, Liu said Chinese authorities understood China's economy was "highly intertwined with the rest of the world" and the economic crisis was worsening.

To combat this, Liu said Chinese authorities would provide stronger financial support to maintain economic growth, while paying close attention to risk management.

China's economy grew nine percent in 2008, slipping back into single digits for the first time in six years as the impact of the global crisis kicked in. In the final quarter, growth slowed to 6.8 percent.

This has prompted the government to pull the fiscal levers, unveiling a record four-trillion-yuan (580-billion-dollar) spending package, mostly large-scale infrastructure projects, in November last year.

The banking sector -- especially the four large state-owned commercial lenders -- are expected to play a crucial role in facilitating the financing of these projects.

The banks appear so far to have heeded the calls, extending a record amount in loans in January.

The loans, totalling an estimated 1.2 trillion yuan (175 billion dollars), were focused on road, power, railway, and other infrastructure projects, state media said earlier this month.

The rapid expansion of credit has triggered concerns that bad loans could rise again, as banks could start lending more indiscriminately.

Liu, the banking regulator, demurred from giving any indication whether China would continue to invest its massive foreign exchange reserves in US Treasury bonds.

"We have strong trade and have attracted a lot of foreign investment, which gives us a significant amount of foreign exchange, and of course we need to invest it," he said.

"We want to invest our foreign reserves based on the principles of safety, liquidity and profitability. US Treasury bonds are just one option," Liu said.

China's foreign exchange reserves, the world's largest, stood at 1.95 trillion dollars at the end of December, the most recent figure available.

During a visit to Beijing last weekend, US Secretary of State Hillary Clinton urged China to keep buying US debt, saying it would help jump-start the flagging US economy and stimulate imports of Chinese goods.

Related Links
The Economy

Memory Foam Mattress Review

SPACE MEDIA NETWORK PROMOTIONS Solar Energy Solutions Tempur-Pedic Mattress Comparison ... Newsletters :: SpaceDaily :: SpaceWar :: TerraDaily :: Energy Daily XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News