DIRECT losses of Chinese banks from the US subprime crisis were not especially large, according to Jiang Jianqing, chairman of the Industrial and Commercial Bank of China.
"Overseas analysts had overestimated the impact of the US subprime crisis on China's banking sector," Jiang said on the sidelines of this year's Boao Forum for Asia, which ended yesterday in southern China's Hainan Province.
ICBC, China's largest commercial lender, suffered a loss of US$1.2 billion from the crisis, Jiang said during a panel discussion on financial reform and innovation.
Bank of China, the largest holder of subprime-related assets in the country, said in its annual report that its investment in subprime asset-backed securities was US$4.99 billion in 2007.
The bank said it had set aside US$1.295 billion to cover a possible decrease in value of subprime securities. However, some analysts had predicted the bank's losses could amount to US$3 billion.
China Construction Bank, the country's major property lender, said on Friday in its annual report it had made provisions of US$630 million for possible losses in its US$980-million subprime investments.
However, Jiang believed the US crisis, which was slowing the world economy, would hit Chinese exporters, especially small and medium businesses. It might also add to the country's inflationary pressure due to rising asset prices.
He also said one reason behind the crisis was that US bonds had attracted too many investors, suggesting that emerging economies should develop bond markets.