Financial institutions will not bail out distressed firms: Officials

Chinese financial institutions will return to their basic function to serve the real economy but will not use it as an excuse bail out businesses facing financial trouble, said senior officials at the Financial Street Forum 2017 in Beijing on Friday.

Liu Guoqiang, assistant governor of the People's Bank of China, the central bank, said: "Financial institutions must reduce funding for zombie companies, combat speculation in real estate and lower hidden local government debts to save more financial resources for other parts of the real economy, which meet the requirements of China's supply-side reform."

Wang Zhaoxing, vice-chairman of the China Banking Regulatory Commission, agreed with Liu by saying that banking regulators will continue to effectively prevent and control debt risks in the industries with excess capacity, the real estate sector and local government financing vehicles to maintain financial stability.