China Closed Hundreds Of Banks In A Sweeping Cleanup. Rural Lenders Remain The Weakest Link.

Customers use ATM machines in Beijing on May 6, 2026. Beijing has accelerated the consolidation of smaller lenders as regulators seek to strengthen the country’s banking system. (Credit: Getty Images)

China closed a record 670 banking institutions in 2025 as Beijing accelerated a sweeping consolidation of smaller lenders, with authorities increasingly relying on mergers and dissolutions to reduce risks concentrated in the country's rural banking sector.

The closures amounted to roughly one-quarter of China's banks, according to an analysis from Fitch Ratings, which noted that the policy-led consolidation and targeted intervention at weaker institutions are intended to support banking-system stability while addressing persistent asset-quality and profitability pressures among smaller lenders.