China's financial risks are manageable despite the steep increase in nonperforming loans during the first six months of the year, said Yang Zaiping, executive vice-president of the China Banking Association.

"Allowances for the loan losses of banking institutions reached about 3 trillion yuan ($471 billion), which is enough to cover the existing nonperforming loans of 1.76 trillion yuan," Yang said on Saturday.

He said that the rise in bad loans is inevitable due to a rapid credit expansion since the financial crisis of 2008. Bank loans increased by more than 9.59 trillion yuan in 2009 alone, up 31.74 percent from the previous year.

In the meantime, China's gross domestic product grew by 9 percent on average during the last few years. Such a rapid growth unavoidably caused harm to the economy and exposed it to risks.

Taking these factors into consideration, the public should not overreact to the NPL increase. The asset quality of Chinese banks is superior and stable compared with their international counterparts, he said.

As of June 30, the average NPL ratio was 1.82 percent for China's banking institutions and 1.5 percent for domestic commercial banks. In contrast, at the end of 2014, the NPL ratio was 2.46 percent for the first 100 of the Top 1000 World Banks ranked by The Banker, a London-based international banking and finance magazine.

Yang urged Chinese lenders to keep a close watch on bad loans so that their growth can be contained.

"Resolving nonperforming loans takes lots of learning. Bankers should decide which NPLs can be converted to good assets through debt restructuring and which must be disposed of, rather than simply write off NPLs, sell them, or withdraw lending from companies," he said.

Zeng Gang, director of banking research at the Chinese Academy of Social Sciences' Institute of Finance and Banking, urged banks to improve their ability to hedge against risks and participate more actively in China's economic restructuring by supporting emerging industries and major national projects.

Along with the rise in NPLs, bank profits have also fallen sharply. During the first six months, the net profit growth of 16 listed commercial banks slowed to 2.58 percent from 10.66 percent a year earlier.

Such a decline in profit growth is a correction of the abnormal fast growth of more than 36 percent for Chinese banks in 2011, Yang said.