Is China's Financial Sector in Crisis? Hsieh Jin-He Reveals 42 Listed Banks 'All Below Book Value': The Situation Will Only Worsen

China's financial stocks are facing a crisis. Hsieh Jin-He, Chairman of Wealth & Finance Media, pointed out that all 42 listed Chinese banks are trading below their book value. Minsheng Bank, with the lowest price-to-book ratio, has fallen to just 0.22x, and Hsieh stated these banks are deeply burdened by non-performing loans. He noted that the banks' major clients were real estate conglomerates that relied on political influence to secure funding. 'Now that some of these firms have collapsed, no one dares to address the bad loans. This is like a patient discovering cancer cells but refusing to remove the tumor,' he said.

Hsieh posted on Facebook that all 42 Chinese banks are below book value. Minsheng Bank has a book value of 15.44 RMB per share but trades at only 3.46 RMB, resulting in a price-to-book ratio of 0.22. Huaxia Bank has a book value of 24.96 RMB per share but trades at 6.91 RMB, giving it a ratio of 0.28.

Hsieh recalled Taiwan's banking crisis shortly after former President Chen Shui-bian took office, when banks were in disarray and credit unions faced repeated bank runs. The Ministry of Finance scrambled to respond, often placing stacks of cash at counters to handle withdrawals. At that time, Taiwan's banks all traded below 0.5x book value—similar to Japan after its 1989 bubble burst, when major banks collapsed and later restructured into financial holding companies. Taiwan underwent two major financial reforms.

In 2020, Hsieh wrote an article predicting, 'What we criticize in Taiwan today will eventually happen in China.' Seven years later, the situation has reversed. Taiwan's 15 financial holding companies now all trade above 1x book value. Yuanta Financial leads with 2.48x, followed by CTBC, SinoPac, and Hua Nan at over 2x. Even the lowest, Cathay Financial, stands at 1.23x. Dr. Li Zhenyu provided updated price-to-book ratios for Taiwan's financial sector, which Hsieh considers highly valuable.

Hsieh emphasized that Taiwan's banking sector has improved through aggressive bad loan write-offs and reduced NPL ratios. With stronger fundamentals, Taiwan's banks should now focus on wealth management and international expansion.

He analyzed that all 42 Chinese banks have price-to-book ratios below 1. Central banks like Bank of China, China Construction Bank, and Industrial and Commercial Bank of China hover around 0.65x. Stronger regional banks like Ningbo Bank (0.85x) and Changshu Bank (0.69x) are relatively healthier, though Ningbo has halved from its 2020 peak of 1.73x.

Banks like Minsheng, Huaxia, and Beijing Bank are deeply troubled by bad loans. Minsheng's largest client was Evergrande Group's Xu Jiayin. Over the past years, firms like Evergrande, Country Garden, Sunac, Greentown, and Vanke expanded rapidly using political leverage to access bank funds. Now that some have collapsed, no one dares to address the resulting bad loans.

Hsieh stated, 'This is like discovering cancer cells but refusing to remove the tumor. The condition will only worsen. China's banking sector is entering a difficult period.'