China's $9 Trillion Moral Hazard Is Now Too Big to Ignore
- Draft rules said to dispel assumption of government guarantees
- ‘Rolling this back is China’s biggest financial challenge’
China Said Drafting Asset Management Risk Restrictions
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China may be about to embark on its most ambitious -- and perilous -- campaign to convince investors that they shouldn’t depend on a bailout when markets go south.
In a rare show of cooperation, the nation’s main financial regulators are drafting new rules for asset-management products that aim to make clear the investments don’t have government guarantees, people familiar with the matter told Bloomberg News on Tuesday. The products, which promise higher returns than bank deposits but are viewed by many investors as a form of risk-free savings, have become an integral part of the Chinese financial system after swelling in recent years to almost $9 trillion as of June 30.