Liquidity within the banking system will increase since this will no longer be tied up in NPAs; and c. Bank capital will be freed-up, thereby increasing the system’s risk-bearing capacity and ability to expand investment and lending activities.
Although concerns about slowing growth in China and falling commodity prices appear to have eased from earlier this year, China continues to face considerable challenges as it rebalances its economy toward domestic demand and consumption and away from export-led growth.