Financial (In) Stability in China

“The PBOC published the 2014 financial stability report and it provided some interesting figures. The off-balance-sheet business of Chinese banking system rose to as large as 57.7 trillion yuan, 1% higher than China’s GDP in 2013. Acceptance bills, entrusted loans and entrusted investments totaled 8.94 tn, 8.2 tn and 3.67 tn yuan respectively but the composition of the rest is unknown. Shadow banking continued to expand very rapidly and it is not only limited to trust companies. The asset management business of brokers, which is very similar to trust products, totaled CNY 4.83 trillion, up 186% from a year ago. Fund companies also manage 0.94 trillion quasi-credit assets. The large off-balance-sheet assets and quasi-credit assets managed by non-bank institutions underlie huge risks as they lack transparency.” [Link]

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