RBS is bailing out of China

The Royal Bank of Scotland is cutting lending to Chinese companies in the midst of the country's economic slowdown.

The bank slashed investments in China by £1.2 billion ($1.9 billion) to £2.4 billion ($3.8 billion) in the first half of the year "with reductions mostly in corporate lending", according to first half results out today.

That's not a big part of RBS's balance sheet but it tells two stories.

Firstly, the bank is less willing to take big risks outside of its core businesses. RBS is in the middle of a deep restructuring programme and the management is trying to stabilize the bank, which took a huge government bailout in 2008 to save it from collapse.

Secondly, China is becoming less attractive to international financiers as it weathers a slowdown in economic growth and a stock market collapse.

The world's largest hedge fund, Bridgewater Associates, warned this month that big trading losses taken by the Chinese households will weigh on the country's 7% growth target. Stocks plunged more than 8% on Monday and the benchmark Shanghai Composite index is down around 30% from its highs in June.