CBRC Reins in Wealth Management Boom


China’s booming market in wealth management products is coming under pressure from regulators concerned about its contribution to the shadow banking sector.

Growth in the wealth management product market slowed markedly last month according to the latest figures from the China Banking Regulatory Commission.

CBRC data shows that outstanding products issued by banks reached 29.1 trillion yuan (approx. USD$4.2 trillion) at the end of March, for a year-on-year gain of 18.6%, as compared to a figure  of 53% for the same period last year.

Wealth management products have emerged as one of the most important components of China’s shadow banking sector, after nearly tripling in value over the past three years.

The instruments are popular with both retail and corporate investors because of the strong returns they offer.

The central bank has responded to surging growth in WMP’s by incorporating them into its macro prudential assessments in the first quarter of this year.

CBRC has also flagged a crackdown on WMP’s, which have drawn increased public attention following a mammoth fraud case in Beijing involving China Minsheng Bank.