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China Bank Debt Repackaging Raises Risk of Crisis, Fitch Says

China’s record loan growth and the repackaging and selling of debt by its banks has raised credit risks “considerably,” and might lead to another financial crisis, Fitch Ratings Ltd. said.

“Credit is disappearing from bank balance sheets, resulting in a pervasive understatement of credit growth and credit exposure,” Charlene Chu, Fitch’s senior director of financial institutions for China, said at a conference in Singapore today. “But credit risk has not disappeared, merely been transferred to investors.”