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Trouble Is Brewing in the Darkest Corner of China’s Shadow Banking

  • Losses feared in products sold by independent wealth managers
  • Regulators have taken notice, but oversight is still minimal
Shanghai's Financial District as China Targets Smaller Lenders in Latest Shadow Banking Crackdown
Photographer: Qilai Shen/Bloomberg
Updated on

Analysts on the lookout for China’s next financial shock are training their sights on the least regulated corner of the nation’s sprawling shadow banking system.

Their concern centers on so-called independent wealth managers, which have expanded rapidly in recent years by selling high-yield products to affluent investors. Largely untouched by a government clampdown on nearly every other form of non-bank financing, the industry has grown from obscurity into a major source of funding for cash-strapped Chinese companies.