Shadow banking risks in China have been significantly reduced, says regulator

BEIJING, July 30 (Reuters) – The assets and risks of China’s “shadow” banking sector have shrunk dramatically thanks to continued regulation, the state-run Securities Times said on Saturday, citing a top regulator.

The sector was down more than 29 trillion yuan ($4.3 trillion) at the end of June from its all-time high, said Liang Tao, vice chairman of the China Banking and Insurance Regulatory Commission.

He did not specify when the peak was.

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Liang, however, warned of high hidden risks, as some products have a complex structure and high leverage levels, the newspaper said.

People should be alert to a rebound in shadow banking risks, as some institutions might use inappropriate financial innovations to create new variants of shadow banking, Liang said.

In recent years, China has cracked down on shadow banking, concerned about the risks hidden in the high volume of complex and potentially risky loans in the sector. But as the weakening economy puts pressure on businesses and individuals, authorities fear shadow lending and illegal lending are on the rise.

($1 = 6.7433 Chinese yuan renminbi)

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Reporting by Judy Hua and Ryan Woo; Editing by William Mallard

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