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China's Shadow Banking Halts as Regulation Bites, Moody's Says

  • Shadow banking sector stopped growing in first half of 2017
  • Assessment follows another warning on debt by the central bank
People's Bank of China headquarters in Beijing

People's Bank of China headquarters in Beijing

Photographer: Qilai Shen/Bloomberg

China’s shadow banking sector, estimated by some analysts to be worth 122.8 trillion yuan ($18.5 trillion), stopped growing in the first half of the year as issuance of wealth management products declined, according to Moody’s Investors Service.

For the first time since 2012, China’s gross domestic product grew faster than shadow banking assets in the six-month period, Moody’s said in a statement Monday. Following last month’s Communist Party Congress, further regulation will continue to rein in shadow banking and address some of the key systemic imbalances, Moody’s said.