China closed 670 small banks to merge into larger banks
China closed 670 small banks in 2025, about one-quarter of all its banks, in a big move to make its financial system stronger.
The goal? To merge smaller, struggling banks into bigger ones that can handle economic ups and downs better.
Fitch Ratings says this is mostly about fixing issues at rural banks that have been hit hard by bad loans and low capital.
China growth drops to 4.3%
China's economy has slowed down, with growth dropping to 4.3% recently, the lowest in years.
Rural banks are especially feeling the pressure, with nonperforming loans rising above the national average.
The good news: because these small banks don't have huge ties to each other, experts believe there's little risk of a chain reaction or wider crisis.
This consolidation is part of China's push for a more resilient banking system going forward.