IMF warns China over fragile banks

Fears Chinese banks are incapable of withstanding multiple crises.

The International Monetary Fund is warning China about the possible fragility of its financial system. An IMF report said China's banks are strong enough to support isolated crises, but incapable of overcoming a crisis derived from overexposure to credit, housing bubbles and the currency values.

The report is based on stress tests carried out on 17 Chinese banks that account for 83% of the commercial banking system. It said that reduced growth and a housing bubble will lead to a credit crisis similar to that afflicting the United States and that caused the present global crisis.