China faces risks of investment rebound, more NPLs

BEIJING, Mar 18 (Reuters) China's economy faces the risks of a rebound in fixed-asset investment and of an increase in non-performing bank loans, Wu Xiaoling, a deputy governor of the People's Bank of China, said on Saturday.

She told a financial forum that, because inflation was currently subdued, it was an appropriate time for China to carry out a long-discussed adjustment of its mechanisms for pricing energy and natural resources.

Investment has been the main driver of China's rapid growth but policy makers are worried that much of the money is going into wasteful projects, generating overcapacity that could lead to bankruptcies and a new crop of bad loans on the books of the nation's banks.

REUTERS VJ RK0830