Banking Crisis

China's Wealth Management Products' Value Stood At RMB30 Trillion At End-April - Report

Tom Burroughes Group Editor 15 May 2017

China's Wealth Management Products' Value Stood At RMB30 Trillion At End-April - Report

Official figures shows that the size of the wealth management products sector in China now stands at $4.35 trillion. The sector has prompted concerns about vulnerabilities to a sharp contraction in the economy and financial system.

Official data shows that wealth management products in China – a sector that has prompted worries about risk embedded in the country’s financial system – stood at RMB30 trillion ($4.35 trillion) at the end of April, a report late last week from Reuters said.

Banks held RMB4.2 trillion of interbank certificate of deposits at the end of April, up by almost RMB70 billion from the end of March, the news service quoted Xiao Yuanqi, chief of prudent regulation bureau of China Banking Regulatory Commission, as saying.

Banks' interbank investments totalled RMB37 trillion at the end of April, while entrusted loans were RMB13.83 trillion.

WMPs are investments offering fixed rates of return well above regulated interest rates for deposits and are often used to fund investments in sectors where bank credit is restricted. The offer of higher returns, it is said, means they come with more risk, but this is not always easily understood by end-clients. They are typically actively managed by banks, with other firms commonly used as "channels", but few are recorded on banks’ balance sheets. The People’s Bank of China, the Asian giant’s central bank, has been monitoring the off-balance sheet wealth products sector of banks as part of an effort to foil a potential blow-up. (See a related article on the matter here.)

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