Beijing has cracked down on shadow financing but it still remains a key risk for Chinese banks, a ratings agency warns.
A year ago Fitch Ratings called the sector "a serious concern" and urged policymakers to control the boom in lending and enforce transparency.
Today, Fitch said Beijing's efforts to improve monitoring and risk disclosure have been inadequate. In the chart below, they note total leverage (as a percentage of GDP) has doubled since 2009, with off-balance sheet financing — trust loans, entrusted loans and wealth management products — accounting for 18 per cent of total loan growth at year-end, versus just 2 per cent a decade ago.
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