By Hua Cheng
It's been 20 years since a Chinese bank failed. But recent bailouts of three regional lenders have raised concerns about systemic problems in China's financial sector. While risks have grown for China's smaller banks, we believe that the Chinese banking system remains robust.
In May, Chinese financial regulators took control of regional lender Baoshang Bank because of serious credit risks. While personal and small business accounts were protected, some corporate and interbank customers suffered losses. This shocked investors who had formerly believed that the government effectively guaranteed all Chinese financial institutions. The