IMF warns China's banks face growing risks

By the Associated Press | November 14, 2011 | 10:05 PM EST

BEIJING (AP) — The International Monetary Fund says China's banks face growing risks due to a credit boom and it urged Beijing to reduce the government role in lending decisions.

The report Tuesday adds to warnings by industry analysts that China's banks face a possible rise in bad loans and other problems after a flood of lending helped it rebound quickly from the 2008 global crisis.

The IMF cited possible risks from a fall in soaring real estate prices, a rise in bad loans due to crisis-related lending and growing imbalances in an economy that relies heavily on exports and investment.

The IMF urged Beijing to move further toward using interest rates instead of direct orders to regulate lending.