The ratcheting up of U.S. trade barriers on China will heighten the drag on the Chinse economy--and, in turn, the banks. S&P Global Ratings has lowered our base-case and downside scenarios for problem loans in response to our economists' GDP revisions. Our base case now foresees the nonperforming assets (NPA) ratio ranging 5.6%-6.3% over 2025-2027. This is 15-35 basis points higher than our previous estimates outlined in a report published on April 3. The NPA is our broad-measure of problem loans, inclusive of nonperforming and special-mention loans, as well as our estimates of other delinquencies. Our economists see tariffs slowing China's real GDP growth to an average of 3.6% over 2025-2027 (see "Global Macro Update: Seismic Shift In U.S. Trade
