China’s banking sector has emerged as the principal source of sovereign risk, reversing a decade-long trend, say analysts.
China’s ECR score has plummeted to a 10-year low as fears grow that policymakers’ steps to reduce credit growth from mid-tier lenders and leverage in the shadow banking system will exact a heavy macroeconomic toll at a time of softer growth.
China’s ECR score fell by 0.4 points in June to 59.4, indicating mounting concerns of a blow-up in the country’s banking sector.
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