China vows to save its banks from failure when bubble bursts
DAVOS — China’s financial regulator has vowed to rescue the Chinese banking system immediately to avert a banking crisis when the bubble bursts, issuing a blanket guarantee that no major institution will be allowed to fail.
Beijing says it has studied the errors that led to the Lehman crisis in 2008 and will not allow a chain reaction to occur, even if this means lost economic growth and dynamism.
“We have too much debt in our system. If something bad happens, we have learnt from the U.S. financial crisis, and we will move very swiftly to contain the risk so that panic caused by a small institution does not spread,” said Fang Xinghai, deputy chief of the China Securities Regulatory Commission and a key architect of policy.