China is merging hundreds of small banks to fend off financial stress

• China is merging hundreds of small rural banks to stomp out bad loan conditions, Bloomberg reported.
• In 2022, the bad-loan ratio of small banks was twice that of the whole sector.
• But previous mergers didn't necessarily improve this, and challenges remain.

Beijing is tackling high-risk financial lenders by enacting a major consolidation wave that will merge hundreds of dealers across the $6.7 trillion sector, Bloomberg reported.

These smaller, rural banks will eventually join together into massive regional institutions. The move aims to squash bad debt conditions that have proliferated among the 2,100 lenders under scrutiny.