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China's $2 Trillion of Shadow Lending Throws Focus on Rust Belt

  • Risk from shadow banking concentrated at regional lenders: UBS
  • Informal loans pose potential threat of systemic risk
Chinese one-hundred yuan banknotes.
Photographer: SeongJoon Cho/Bloomberg

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Regional banks in China’s rust-belt provinces are driving the rapid expansion of shadow banking in the country, fueling a web of informal lending that poses wider risks to the financial system, according to a study by UBS Group AG.