Wave of Rural Bank Closures Exposes Growing Risks in China’s Financial System, Analysts Say

Forced mergers are being used to prevent unrest, but experts say the strategy is redistributing—not reducing—the danger.

Headquarters of central bank the People's Bank of China in Beijing on Dec. 13, 2021. Andrea Verdelli/Bloomberg via Getty Images

China is rapidly restructuring its network of rural banks, with regulators accelerating closures and forcing stronger institutions to absorb failing lenders.

On April 30 alone, multiple rural banks across the country were dissolved, with their assets, liabilities, and operations transferred to larger shareholder banks, according to Chinese online news platform Sina Finance.