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. With population of China, a population exceeding 1.4 billion, it is the list of countries by population (United Nations), second-most populous country after ...
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 (THU) is a public university in Haidian, Beijing, China. It is affiliated with and funded by the Ministry of Education of China. The university is part of Project 211, Project 985, and the Double First-Class Constructio ...
, 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
*
Corporate debt bubble
The corporate debt bubble is the large increase in corporate bonds, excluding that of financial institutions, following the 2008 financial crisis. Global corporate debt rose from 84% of gross world product in 2009 to 92% in 2019, or about $72 ...
*
Shadow banking in China
*
Local government financing vehicle
In China, a local government financing vehicle (LGFV) (), is a funding mechanism for local governments. An LGFV is usually an investment company that borrows money to finance real estate development and other local infrastructure projects. LGFVs c ...
References
Financial services in China
Banking in China
Management cybernetics
{{China-stub