The State Council, China’s cabinet, said that it will loosen its grip on interest rates only gradually and will strengthens its supervision of less-regulated ‘wealth-management’ products.
In a statement, the State Council said that it would guide banks toward separating their wealth-management product business from the traditional lending business.
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The statement indicates Beijing will keep a close watch on how banks sell wealth-management products that could moderate products sales which have become a de facto way to skirt interest-rate limits.
The officials didn’t give details and time frames of how these general goals would be accomplished, but they said funds raised through wealth management products should be directed toward projects that support the real economy.
Yang Jiacai, assistant chairman of the China Banking Regulatory Commission, told reporters at the same briefing that the value of wealth-management products had reached CNY8 trillion (US$1.3 trillion) and they are being strictly monitored and don’t represent a systemic risk to the nation’s financial sector.
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