Shadow Bank Assault Backfires as Rates Lure Cash: China Credit

China’s crackdown on shadow banking is backfiring as a plunge in stocks prompts individual investors to pump increasing amounts of cash into wealth management products that offer yields more than double the deposit rate.

A record 1,137 of the investment plans were sold by about 70 banks in the last two weeks, almost 50 percent more than the similar period ended June 14, according to Benefit Wealth, a Chengdu-based consulting firm tracking the industry since 2007. China Minsheng Banking Corp., the nation’s first privately owned lender, last week sold a 35-day product with an annualized yield of 7 percent.