BEIJING (Reuters – China is making progress in cleaning out non-compliant wealth management products (WMPs), a high-ranking regulatory official claimed on Saturday. The announcement came after he called a “basically complete” transition period for the sector’s years-long crackdown.
WMPs are investments vehicles that issuers, such as banks or property developers, market to both retail and corporate investors. WMPs often offer yields higher than deposits. WMPs have become popular because some of China’s most indebted developers are facing a financial crisis.
Cao Yu, Vice Chairman of China Banking and Insurance Regulatory Commision stated at a Beijing forum that all non-compliant products for short-term wealth management and those with principal guarantees were eliminated before 2021.
He said that the vast majority of banks had corrected their WMP stock on time, especially small- and medium-sized ones.
Cao indicated that financial trust product accounted for an ever decreasing percentage of WMPs. However, some non-compliant trust items, which are used by certain companies to finance, have plunged more than 80 percent.
China’s regulators have imposed strict rules in the asset management industry in 2018. This was part of an overall push to reduce large, often opaque financial risks.
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