China’s shadow banking flashpoint: wealth management products

CHINA ADVISORY - Report 09 Aug 2019 by Andrew Collier

The weakest link in China’s financial system is the size and growth of the financial system’s wealth management products (WMPs). The property market may be the shakiest aspect of the real economy, but on the financing side, WMPs are a high-risk funding source. The CNY29 trillion outstanding WMPs are short-term funding vehicles that a) inflate the property market; b) provide risky short-term loans to the real economy; and c) fuel bubbles in other asset classes, such as equities.

New recently enacted rules are designed to reduce the risk in the system by creating institutions separated from the banks responsible for them. However, this may simply result in increased financial risk.

Now read on...

Register to sample a report

Register