China's shadow banking crusade risks bond market crash

Shanghai

CHINA'S campaign to cut high debt levels in its economy is aiming this year to shrink the US$3 trillion shadow banking sector, which could drain a critical source of income for the country's banks and of funding for its fragile bond market.

Shadow banking, a term for financial agents that perform bank-like activity but are not regulated as banks, has boomed in China, the world's second largest economy, as a way of circumventing government's tight controls on lending.