Credit risks curbed in high-risk sectors

Credit risks in industries with excess capacity has been digested better than expected by China's major lenders, creating a favorable condition for policymakers to contain risks in the financial system, analysts said.

Bank loan growth to the higher-risk manufacturing, mining and trade finance sectors in China has essentially stalled. And, listed Chinese banks have digested around 10 percent nonperforming loans in the three sectors, according to a recent report by Morgan Stanley.

"The economic structural adjustment and the digestion of bad loans in the industries with overcapacity are better than the market expectation, which has laid a good ground for the regulators to manage risks in the financial markets," said Richard Xu, an equity analyst at Morgan Stanley Asia Ltd.