If you think the European stress tests were too weak, you'll probably appreciate what China is doing with its banks.

Bloomberg:

China’s banking regulator told lenders last month to conduct a new round of stress tests to gauge the impact of residential property prices falling as much as 60 percent in the hardest-hit markets, a person with knowledge of the matter said.

Banks were instructed to include worst-case scenarios of prices dropping 50 percent to 60 percent in cities where they have risen excessively, the person said, declining to be identified because the regulator’s requirement hasn’t been publicly announced. Previous stress tests carried out in the past year assumed home-price declines of as much as 30 percent.

Beyond the strenuous conditions, there's another aspect of this that's interesting, and that's the effect that there wouldn't appear to be an imminent crisis that necessitates some showy event. Regulators quietly told the banks obviously (otherwise it wouldn't just be coming out now), and it seems they really want to know what the results would show, rather than have a result that they can hold up as evidence of "transparency."

That's not to say there aren't concerns about Chinese banks -- there are. But the government actually would like to measure that problem, rather than paper over it.