Default in our stars: China’s banks use satellites to track assets with sky-high scrutiny

Chinese banks are increasingly deploying satellite remote sensing to monitor loan collateral and assess credit risks, a trend accelerated by a real estate slump and rising non-performing loans. China Merchants Bank and Shanghai Pudong Development Bank began using satellites this year, following earlier adopters Ping An Bank (2022) and Zhejiang E-Commerce Bank (2020). This month, Postal Savings Bank of China and Chang Guang Satellite Technology launched a jointly developed satellite into orbit, as reported by the Economic Observer. The technology, which leverages China's commercial space sector since 2014, provides high-resolution imagery of assets like agricultural land, real estate projects, and industrial activity, helping banks ensure collateral remains viable for repossession in case of default.

Analysts highlight that satellite monitoring is particularly valuable for evaluating rural and small business borrowers, where traditional credit records may be incomplete. Liang Yan, an economics professor at Willamette University, notes that the goal is to reduce non-performing loans and better assess these markets. The shift reflects a broader trend of using advanced tech to mitigate financial risks, as China's largest banks grapple with high bad assets in property loan portfolios. This space-based surveillance marks a significant escalation in asset tracking, offering banks a proactive tool to prevent defaults and stabilize lending in a volatile economy.