China has widened regulatory oversight of its largest lenders, adding another institution to its roster of domestically systemically important banks in a move designed to insulate the financial system from mounting risks tied to the country’s prolonged property downturn. The updated list, released jointly by the People’s Bank of China and the National Financial Regulatory Administration, now includes 21 banks that are subject to stricter capital, risk management, and supervisory requirements.
Newly added to the designation is China Zheshang Bank, a Zhejiang-based lender with assets totaling 3.35 trillion yuan, underscoring authorities’ determination to strengthen safeguards around institutions whose distress could ripple across the broader economy. The D-SIB framework, first introduced in 2021, now spans six state-owned commercial banks, ten joint-stock lenders, and five urban banks, together representing the bulk of China’s banking assets.
Officials said they would “continuously strengthen supplementary supervision” to ensure the safe and sound operation of these critical institutions, signaling Beijing’s growing reliance on macroprudential tools as property-sector weakness persists. While headline indicators remain stable, regulators are wary of latent risks stemming from developer debt and falling housing demand.
Data show that the non-performing loan ratio for commercial banks stood at 1.5 percent at the end of 2025, unchanged from the previous year, suggesting that financial stress has yet to fully surface on bank balance sheets. Nevertheless, authorities are focused on preventing property-related strains from spilling into the financial system, especially as dozens of developers warn of deepening losses.
According to a report by Yicai, at least 54 real estate firms have issued profit warnings for 2025. Among the hardest hit is China Vanke, once considered an industry bellwether, which expects a record net loss of 82 billion yuan. China Fortune Land Development has forecast a deficit of between 16 billion and 24 billion yuan, while Greenland Holdings anticipates losses ranging from 16 billion to 19 billion yuan.
To reinforce systemic defenses, the central bank created a macroprudential supervision and financial stability committee at the start of 2025, operating alongside its long-standing monetary policy committee. The structure mirrors international practice, where banks deemed critical to the global system by the Financial Stability Board must maintain higher capital buffers and stronger loss-absorbing capacity.
China’s largest lenders are already embedded in that global framework. Industrial and Commercial Bank of China is categorized in a higher-risk “bucket 3” group, placing it alongside major Western peers such as Bank of America, Citigroup, and HSBC, highlighting the international significance of China’s financial institutions.
Regulators have also broadened scrutiny beyond traditional banking. Authorities recently summoned six major ride-hailing platforms, ordering them to standardize lending practices, clearly disclose financial partners, and improve warnings about borrowing risks, reflecting concern over credit expansion in non-bank channels.
Recent credit data show a mixed picture. Chinese banks issued 4.7 trillion yuan in new loans last month, down from 5.13 trillion yuan a year earlier, while aggregate financing — a wider gauge of liquidity including bonds and other instruments — rose to 7.22 trillion yuan, slightly higher than the same period last year.
The expanded oversight signals Beijing’s determination to act preemptively, tightening supervision before property-sector distress can translate into a broader financial shock, and reinforcing the resilience of a banking system central to both domestic growth and global markets.
