President Xi Jinping(pic) has declared that financial security is vital to national security. The government is particularly concerned about the massive shadow banking industry, lending conducted outside of the regulated formal banking system.
SHANGHAI: Strains are spreading in China’s US$15 trillion shadow banking industry as investors pull back from the debt-like savings products that helped drive leverage to dangerous levels.
Most affected are some US$3.8 trillion of so-called trust products, until now the fastest-growing shadow banking segment and a popular way for debt-ridden property developers and local governments to raise funds from millions of ordinary Chinese. In recent weeks, at least two of the products have been forced to delay payments as the market started to freeze up, making it harder to refinance maturing issues with new ones.
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