China banks expected to report shrinking capital

Hong Kong

HIT by bad loans, Chinese banks are expected to show a weakening in their capital strength in first-half earnings, raising the prospect that the government might have to inject more than US$100 billion to shore them up, according to some analysts.

There are early signs that government is already taking action to help some of the smaller banks, which are struggling to maintain their capital ratios as China's economy slows, interest margins fall, and bad debts climb.