China Ramps Up Central Planning
On Tuesday, Bloomberg reported that the banking regulator had told lenders to lower interest rates on wealth-management products, a popular vehicle for domestic savers, after yields in the $4 trillion industry jumped in past months. Officials also extended their campaign against risky overseas acquisitions, with conglomerate Dalian Wanda Group Co. coming under scrutiny after a deals spree.
…Some Chinese lenders received an order from the China Banking Regulatory Commission earlier this month to lower their rates on WMPs, according to people familiar with the matter. The requirement applies to on-balance sheet WMPs, which account for only about a fifth of the total market, according to one of the people, who asked not to be identified as the matter isn’t public.
…An editorial in the Communist Party’s People Daily newspaper on Monday pointed to the seriousness of the campaign, warning of potential “gray rhinos” — a variation on the black swan events popularized during the global financial crisis, with the difference that the danger from a charging rhino is more immediate and the animals are less rare.