CBIRC Hails End to “Wild Growth” of Chinese Shadow Banking

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China’s banking regulator says it has successfully brought an end to the unrestrained growth of the domestic shadow banking sector.

As of the end of June China’s interbank wealth management balance had fallen to around 10 billion yuan from approximately 6 trillion yuan at its peak, according to figures released by the China Banking and Insurance Regulatory Commission (CBIRC). Trust loans – another key form of shadow banking in China – had contracted by around 390 billion yuan compared to the start of the year.

“Dismantling high-risk shadow banking has continually been the work focus for CBIRC in recent years,” said Liu Zhongrui (刘忠瑞), a senior official from CBIRC’s statistics and risk monitoring department, at a press conference held on 21 July.

“Following unrelenting hard work, the scale of Chinese shadow banking has fallen greatly from its historic peak of more than 25 trillion yuan, and the momentum of wild growth has already been contained.”

Liu said that CBIRC would continue to guard against a rebound in shadow banking, and strictly prevent “multi-tier embedded investments, empty transfers of funds, [finance] fleeing the real for the empty, and fake financial innovations.”

“[We] will include all financial activity under regulation, unify standards for the same types of institutions and products, and establish shadow banking risk categories, risk weightings, capital provisions and other standards.”