​Explosive growth in wealth management products worrying Chinese elites

​Explosive growth in wealth management products worrying Chinese elites

​Explosive growth in wealth management products worrying Chinese elites State-media outlet, Xinhua, reported comments of the vice head of the central bank, Pan Gongsheng, on Saturday concerning the state of the country's booming growth in wealth management products.

Pan was quoted in the reported as saying that the regulation of the wealth management products market "should be strengthened to control risk and push forward the healthy development of the sector.”

No wonder. Xinhua also reported the value of Chinese wealth management products had ballooned to 12.8 trillion Yuan, U.S. $2.62 trillion, by the end of May. The growth of wealth management products in the country has been absolutely astounding: A growth rate of 60 and 80 per cent annually has recently slowed to ‘just’ 30 to 40 per cent in 2013. At the same time the market for these products is very opaque. Many of the securities have been issued in the so-called shadow banking sector, outside of the regulated channels. Some have speculated that many of the dodgiest of these products, short-term in nature, issued a few years ago, are about to come due—worries that retail investors in China are about to get burned by badly written products seems to be growing. That the state news agency is quoting senior figures like Pan, who was careful to say the government will do more to ensure “the value of people's financial assets are preserved and increased,” is proof of the high-level concern.