“Empty Financing” by Lenders Is Being Effectively Contained: China’s Banking Regulator


Wang Zhaoxing (王兆星), vice-chair of the China Banking and Insurance Regulatory Commission (CBIRC), believes that regulators have achieved some initial success in containing “empty financing” within the Chinese banking sector.

Speaking at the 4th meeting of the 7th grand members assembly of the China Banking Association, Wang hailed the success of the Chinese banking sector in improving its ability to service the real economy, combat financial malfeasance, heighten its risk resistance capability, further open to the rest of the world and embrace the latest fintech developments.

Wang said that since the crackdown on the financial sector launched by the now-defunct China Banking Regulatory Commission (CBRC) in March of last year, much success has been achieved in ensuring that lenders do not “avoid the real and turn to the empty.”

“Firstly, balance sheet growth has gradually eased, secondly, bank off-balance-sheet funds have gradually returned to balance sheets, and thirdly, the trend of ‘avoiding the real and turning to the empty’ has been initially contained.”

Official data indicates that commercial bank interbank assets and lending contracted in 2017 for the first time since 2010, with interbank wealth management products declining by 3.4 trillion yuan at the end of 2017 compared to the start of the year,

Wang also highlighted ongoing problems and challenges in the Chinese banking sector.

“This primarily embodied by: insufficient balance, coordination and fullness of financial sector growth; inability to fully satisfy the needs of the people with respect to high-quality financial services; the need for increases in the ability and level of servicing of the real economy by the financial sector, financial risk that still cannot be overlooked, the need to strengthen the corporate management of banking sector financial institutions; new problems and challenges with regard to the domestic and overseas compliance of banking sector financial institutions, and pressure on the banking sector to change models and innovate as a result of new fintech developments,” said Wang.

“These [problems] will require further reform and opening of the banking sector.”