![]() Unlike other sectors, the real estate industry is more tightly connected with the financial industry and associated with rapid development of related financial derivatives. The shadow banking system in 2016 was equivalent to 64.5 trillion yuan ($9.59 trillion), with three core products: entrusted loans, trust loans and the undiscounted bank acceptance notes. In particular, the rapid expansion of shadow banks and their innovative products have posed great challenges to the supervisory authorities. Chaotic conditions exist in some areas: there is an overheated real estate industry with related nonperforming loans, local government debt is at risk of default, and Internet finance and shadow banks are putting intense pressure on systemic liquidity. Internal and external risks are weighing on China’s financial system, and an “explosion” of any of these problems could endanger the stability of the entire system.ĭomestically, economic downward pressure has been increasing, and financial risks that were formerly concealed by rapid economic growth have been emerging.
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