Towards the end of that decade, there were clear signs that China’s reforms were losing steam. Growth had fallen every year for most of the 1990s from a very high level, inventory accumulation had risen to worrisome levels and the inefficiency of SOEs was an open topic of discussion. In 1999, four large asset management companies (in effect, so-called bad banks) were set up to take on the large quantum of non-performing loans from the banking sector. Ma and Fung (BIS 2002) estimate that the total size of the non-performing loan problem at the four big state-owned banks could have ‘amounted to
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