New rules likely to rein in wealth management product sector

Chinese regulators have decided to add a new weapon in their long-lasting tug of war with Chinese lenders, after the growth of lenders' off-balance-sheet businesses went off the chart this year.

The Chinese Banking Regulatory Commission said that it is drafting a new set of rules to govern lenders' wealth management products. The rules will require full disclosure of lenders' wealth management products, including their design and the risks associated with where the funds are raised and channeled, hoping that the banks will get a sense of prudence in profit-taking.

The commission decided to pull harder after the value of such wealth management products jumped by 8 percent to 8.2 trillion yuan ($1.33 trillion) in just three month ending March 31, from 7.6 trillion at the end of 2012. The products are typically higher-yielding alternatives to bank deposits and are invested in a variety of tools, including equities, bonds and trusts.