BEIJING, June 24 The chairman of Industrial and
Commercial Bank of China , the world's
largest bank by market capitalisation, defended Chinese shadow
banks on Tuesday, saying they support genuine economic activity.
In an oblique denial of criticisms that Chinese shadow banks
encourage speculators, Jiang Jianqing said cash originating from
the notoriously opaque sector is put to productive ends in the
manufacturing and construction industries.
"Credit and loans in China's financial system are basically
invested in the real economy," Jiang told a forum. "Even the
money that comes from the shadow banking system is invested in
the real economy. This is very strange phenomenon in China.
"No matter whether the funds come from trusts, wealth
management products or other channels, they will be invested in
areas such as urban construction, or in the property and
Many financial regulators, including the International
Monetary Fund and China's own central bank, have warned about
the financial dangers of the fast-growing Chinese shadow banks.
The worry is that lax lending standards will stymie the
banking sector with bad loans as China's maturing economy slows
- growth is forecast to cool to a 24-year low of 7.3 percent
Last month, a senior China central bank official scolded the
wealth management sector, which is a part of shadow banks, for
encouraging Chinese savers to behave like gamblers in a process
that he said was unduly raising funding costs.
Another central bank official said over the weekend that
China's wealth management industry had assets totalling 12.8
trillion yuan ($2.06 trillion) at the end of May.
($1 = 6.2 yuan)
(Reporting by Shao Xiaoyi and Koh Gui Qing; Editing by Nick