China is accelerating its consolidation of smaller, mostly rural banks in a bid to shore up its financial system, amid ongoing concerns over an economic slowdown in the country. Beijing's policy-led consolidation saw a record 670 lenders closed in 2025 — about one-quarter of banks in the country — as authorities ramped up mergers and dissolutions to create fewer, larger and better-capitalized institutions, according to Fitch Ratings analysis. Small and rural commercial banks "remain the weakest part of the system" in China, Fitch said in a report , which flagged their "poor asset quality, low capitalization and governance shortcomings," especially in less-developed regions of the country.
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