A wealth management product (WMP; ) is an uninsured financial product sold in
China
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
by banks and other financial institutions. Typically they offer a high rate of interest, and sometimes, purportedly guaranteed return. As of 2016, $2.8 trillion had been sold by banks during the previous 5 years. While the government sometimes intervenes to prevent losses by investors, some WMPs have failed.
Financial experts such as David Daokui Li of
Tsinghua University
Tsinghua University (; abbreviation, abbr. THU) is a National university, national Public university, public research university in Beijing, China. The university is funded by the Ministry of Education of the People's Republic of China, Minis ...
, a member of the Chinese central bank’s monetary policy committee, believe wealth management products pose substantial risks to China's financial stability.
Wealth management products grew rapidly throughout 2015 and 2016. Chinese households, companies and banks held a record balance of $3.9 trillion (26.3 trillion yuan) of WMPs as of June 30, 2016.
See also
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Corporate debt bubble
The corporate debt bubble is the large increase in corporate bonds, excluding that of financial institutions, following the financial crisis of 2007–08. Global corporate debt rose from 84% of gross world product in 2009 to 92% in 2019, or about $ ...
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Shadow banking in China
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Local government financing vehicle
References
Financial services in China
Banking in China
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