Shadow banking threatens China's economy, officials warn

Beijing

THE chairman of China's biggest bank and a senior Chinese insurance regulator issued strong warnings on Saturday about the dangers of shadow banking to the Chinese economy, in the latest signs of growing top-level concern here about a rise in highly speculative, poorly regulated lending.

Shadow banking, or lending that takes place outside official banking channels, plays a major role in the Chinese economy, where big government-controlled banks are often slow to lend to private businesses and entrepreneurs.

But experts worry that untrammelled shadow lending could lead to ticking time bombs that could threaten the financial system of the world's second-largest economy.

Yi Huiman, the chairman of the Industrial and Commercial Bank of China (ICBC), which is the world's largest bank as measured by assets, warned about the rapid spread of unregulated investment vehicles, such as wealth m…