Briefing: Shadow Banking in China

Shanghai in 2006, cc Flickr 一元 马, modified,

What is it?

Shadow banking refers to loans and financial products that exist outside the purview of government-regulated banks. It occurs in every corner of global capitalism, from India to the United States, but recently it has been garnering major attention in China. This is owing to scale – both the massive size of the Chinese economy, and the growing portion of lending that occurs in the ‘shadows’ therein.

‘Shadow’ finance comes in many forms in China. There are trusts, leasing companies, credit guarantee associations, money market funds, entrusted loans, and credit-oriented hedge funds.

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