only a low risk of severe financial crisis over the next five years. Thomas Fingar, the top intelligence analyst in the Office of the National Intelligence Director, told lawmakers that China's state- owned banks have large balances of non-preforming loans.
But, he said, "China is introducing market measures to the financial sector and has massive foreign exchange reserves, current and capital account surpluses and low exposure to short-term foreign currency debt."
Beijing is working to curb rural discontent, which "could undermine continued rapid economic growth if not addressed," he said Wednesday in prepared testimony before the House of Representatives' Armed Services Committee.
Fingar said China's rapid military modernization "reinforces concerns about Chinese intentions toward Taiwan."
"We assess that China's aspirations for great power status, threat perceptions and security strategy would drive its modernization effort even if the Taiwan problem were resolved," he said.
U.S. officials regularly press China for more transparency about the aims of its military buildup.
China raised its military budget by 17.8 percent this year to about US$45 billion (euro33 billion) -- the biggest jump since 1995. The Pentagon says actual Chinese defense spending could be twice as high.
