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Fresh Doubts Raised on China's Bad-Loan Data

  • Pudong Bank found to give illegal loans to hide NPLs
  • China NPL figures are widely believed to be underestimated
A woman sweeps a street in a traditional hutong neighborhood in Beijing, China, on Sunday, May 14, 2017. China’s economy is staging a comeback as quickening inflation boosts factory profits, while stricter capital controls and a stabilizing currency help stem outflows.
Photographer: Qilai Shen/Bloomberg

China’s bad-loan data, which analysts and investors have long regarded to be understated, was thrown into question again after the banking regulator uncovered faked reporting at a local lender.

Shanghai Pudong Development Bank Co., the nation’s ninth-largest lender, illegally lent 77.5 billion yuan ($12 billion) over many years to 1,493 shell companies to take over bad loans at its Chengdu branch, the China Banking Regulatory Commission said in a statement late Friday. The branch, which had reported zero bad loans, inflated its earnings and faked other operational data to improve performance and evade compliance, the CBRC found.