Write-off is not a term in China's accounting system, but should be called write-off in China. The write-off of non-performing loans is to verify and eliminate non-performing loans. Non-performing loans refer to loans in arrears. Generally speaking, if the borrower delays repayment of principal and interest for three months, the loan will be regarded as a non-performing loan. When banks determine that non-performing loans cannot be recovered, they should write off these loans from profits. When overdue loans cannot be recovered but have not been determined, the provision for bad debt losses shall be listed on the books.

There are many ways to deal with bad debts of banks. From the perspective of recovery methods, there are cash recovery (that is, cash recovery from debtors), non-cash recovery (that is, paying debts in kind), and write-off. In order to ensure the resolution of risks, improve asset quality and moderate profit growth, banks control the number and rate of non-performing loans. When the economic situation is booming, enterprises operate relatively well. Even if there are risks, loans are not good, and the proportion is more through cash recovery; When the economic situation is bad, it is difficult for enterprises to operate and raise enough cash. Banks can only dispose of non-performing assets in other ways, such as paying debts in kind, writing off, and especially writing off. In essence, it is an accounting treatment process, which affects the bank's loss reserve and profit and loss, and does not affect the creditor-debtor relationship with customers. Therefore, the increase of write-off often means that the operating efficiency of enterprises decreases and more cash recovery (and non-cash recovery) cannot be realized.