Most
closures hit small rural banks struggling with weak returns, high bad loans at
2.8% versus the sector's 1.5%, and thin capital. Beijing accelerated mergers
and dissolutions, cutting total banks nearly 23% over four years to improve
oversight and curb risks from local operations.
The effort comes as fixed asset investment dropped 7.2%, property plunged 19.9%, and official GDP growth hit 4.7% for the first half of 2026, with some models suggesting lower actual figures and heavy bank ties to property and local governments adding strain.