Research On Bad Assets Of Financial Sector Transforming To Public Financial Bearing

Financial sectors in china, especially banking, are suffering a lot from bad assets, such as non-performing loans. In order to solve this problem, PBC offer a large mount of central bank lending, also ministry of finance, in variance ways, injects large sum of capital at the cost of issuing government securities. All these measures improve the account book of banking, such as non-performing loans rate, a decline from 25% to 8.03%. But these implicit subsidies bring fiscal pressure on the central bank, destroying the independent accounting. What's more, ministry of finance's claims on banking based on the bad debt, bad operation of debt service arouses potential fiscal deficit. Author would prove currency crisis and fiscal crisis are in the near future if no measures taken.In the first part of paper, we focus on collecting and analyzing the present situation of Chinese financial system, from year 1997 to 2006. On the basis of above information, author analyze 8 measures, which have been used in disposing the bad assets of financial sectors, including banking, insurance, securities company, and so on. By looking into the balance sheets of financial sectors, PBC, and government, we conclude that majority of bad assets have been transforming to public bearing.In the end, we put forward some advice to strengthen public financial bearing ability, such as establish 'state balance sheet', and call for more information disclosure.