Who’s hot and who’s not? The Chinese Communist party is set to find out in a leadership reshuffle next month. Chinese regulators are already sorting sheep from goats. The result, according to a report from Fitch, is a financial system that is broadly safer, but where risks are steep among smaller lenders.

The authorities are making progress in curbing risky short-term funding. Fitch found the outstanding balance of such loans has fallen for the first time in 10 years. The share of issuance with maturities of up to three months has declined to 49 per cent of the total. But smaller banks and finance groups are becoming increasingly reliant on this form of financing.

Mid-tier lenders get 43 per cent of their funding from short-term sources; big state-owned banks receive only one-fifth. Demand for deposits has been strong because credit growth has outstripped gross domestic product. The ratio of deposits to loans has declined 9 per cent to 61 per cent since the end of 2013.