According to CNBC, China is accelerating the consolidation of smaller, mostly rural banks as Beijing seeks to strengthen its financial system amid concerns about an economic slowdown. Fitch Ratings said a record 670 lenders were closed in 2025, or about one-quarter of banks in the country, as authorities pushed mergers and dissolutions to create fewer, larger and better-capitalized institutions. Fitch said small and rural commercial banks remain the weakest part of the system, citing poor asset quality, low capitalization and governance shortcomings, especially in less-developed regions. The rating agency said return on assets at rural banks fell to 0.45% in the first half from 0.56% in 2021, while non-performing loans rose to 2.8% from the sector average of 1.5%. Fitch said the consolidation is intended to improve oversight, curb regulatory arbitrage and increase transparency, and it added that stress at smaller lenders is unlikely to trigger system-wide contagion because their operations are largely local and interbank exposure is limited.