Value Of Chinese Wealth Management Products Rose In H1 - Official Data

Tom Burroughes

2 September 2016

Wealth management products in China – a sector that has prompted concerns about its robustness should the economy go sour – held a total of RMB26.3 billion ($3.9 trillion) at the end of June, official statistics say.

The data came from the China Banking Wealth Management Registration System. A translation of the report into English was carried by Bloomberg yesterday.

The report said the value of these products rose by 11.8 per cent in the first half of 2016 from the end of last year. More than 450 banks raised a total of RMB84 trillion by selling 97,636 wealth management products in the first six months of the year.

WMPs have been a worry to Chinese and other policymakers, concerned about an accumulation of financial risks. These products are part of what is sometimes dubbed shadow banking; many of them invest in corporate bonds although some also hold loans, and typically are higher risk than conventional, low-yielding bank deposits.

For almost two years, China has been tightening rules on the sector to avoid future problems, mindful of how excess leverage played a central role in the 2008 financial crisis. The report cited research from Moody’s, the rating agency, saying shadow banking in total is worth more than RMB50 trillion. The China Banking Regulatory Commission has brought out new rules on these products, such as to curb the number of smaller banks and mass-market investors, the report added.