The crackdown has shown no sign of ebbing as the Communist Party gains a much firmer grip over enforcement
Such parlance hints at pervasive graft throughout China’s vast financial system, which has assets of 400trn yuan . Between January and May at least 60 financial institutions were hit with major investigations into personnel, according to official statements and press reports. Research byshows that, over the past five years, 78 executives at China’s eight largest banks have been investigated or charged with corruption.
The new team will have to reckon with the costs of the clean-up, which are mounting. Many wealth-management products have gone bust, causing investors to protest. The bill for cleaning up urban banks and bailing out several large lenders has come to 10trn yuan. Rescuing Anbang alone cost $10bn. Tens of thousands of investors in peer-to-peer lending products have lost their savings. Nearly 630 small banks have been restructured.
That could change if things get worse for developers and local governments. Both are finding it increasingly hard to pay back loans. A group of companies called local-government financing vehicles , which often borrow from banks on behalf of cities and provinces, have spooked markets in recent weeks as many show signs of impending failure. Such risks often emerge suddenly and have the potential to contaminate banks.
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