China's banks will be exposed to greater credit risk against the backdrop of the yuan's accelerating appreciation, said Li Lihui, president of the Bank of China (BOC).
He said credit risks were increasing due to the revaluation which would raise export costs and dampen competitiveness in the international market, resulting in the failure of enterprises with low profitability.
"Enterprises may fail to repay loans if they go bankrupt," said Li.
The value of the yuan against the US dollar hit a new high Thursday, with the central parity rate at 7.8697 yuan to the dollar, breaking the 7.87 mark.
Li said most of the commercial banks in China had strengthened credit risk management. The analysis showed the country's enterprises would grow sustainably despite greater exposure to foreign exchange risks.
(Xinhua News Agency November 10, 2006)
