From Yahoo Finance: 2025-05-26 09:11:00

China is consolidating its financial industry through mergers to create “giant” banks and brokerages. Over the past year, one in 20 rural banks in China has closed amid a major overhaul after a property market crisis. President Xi Jinping aims to enhance financial services for the real economy through this effort.

The consolidation seeks to streamline China’s financial landscape, creating competitive firms to rival global giants like JPMorgan. Beijing aims to reduce risk in the financial system by restructuring local government debt and closing insolvent rural banks. This move is part of reshaping the economy after years of credit-driven growth.

China’s 3,603 rural banks manage only 13.3% of total assets, highlighting the need for reform. The China Securities Regulatory Commission stresses the importance of enhancing the core competitiveness of top-tier investment banks. The increase in mergers shows regulators’ confidence in mitigating risks within the financial system.

George Magnus from Oxford University’s China Centre believes a system with more big banks and brokerages can help shape China’s financial policies during economic transitions. Regulators are accelerating merger efforts to establish global giants and de-risk the financial system. This move indicates confidence in mitigating significant risks within the financial system.

Read more: China accelerates banking merger efforts to establish global giants