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China $10 Trillion Shadow Bank Crackdown Has Long Way to Go

  • Initial success combating interbank borrowing, asset products
  • Banks discover ways around the curbs in quest for funding
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Bloomberg’s Stephen Engle reports on China’s efforts to tame the country’s $10 trillion shadow banking sector.(Source: Bloomberg)
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Chinese regulators are making progress in their attempts to tame the country’s $10 trillion shadow banking sector, but after a one-year squeeze on the riskiest areas of the industry, there’s still a lengthy battle ahead.

"We’ve had a good beginning to a long journey," said Larry Hu, a Hong Kong-based economist at Macquarie Securities Ltd. "Some components of shadow banking are shrinking and interbank leverage has started to drop. But we are far from the stage where we can claim the job is done."