Financial market regulators commented that there are loopholes in their guidelines to regulate the wealth management space and protect lay investors. CSRC and CBRC has tried making new laws. There are still gaps in the regulatory space due to rapid growth for wealth management. The combined assets managed by banks, insurance companies, trust funds and fund managers almost exceed 90trillion yuan. There are risks surfacing as the sector grows. Regulators are starting to doubt the regulations as inadequate. There are regulatory holes need to be plugged. For instance, CBRC decided on reducing risk by asking banks to split the lending and wealth management business. Regulation was in draft but never really executed due to disagreements. There were great arguments over the split.

Stock market bear downturn went against wealth manager's investing performance. Insurance companies who had vested interest in stock markets has seen their asset value fall. Banking officials pointed at the regulators for encouraging risk taking by wealth managers. There was no good coordination between different agencies. Asset management sector is getting messier due proliferation of complicated investment package. Chinese banks controlled biggest portion of funds in 2015 and are invested via wealth management space. Trusts, securities firms, insurance companies and fund corporations were handling 16trillion, 12 trillion, 11 trillion and 9 trillion yuan respectively. Smartphones and internetas well as interest rate drops all pushed retail investors and huge financial outfits to investment in these wealth management package.

Sales proceeds from these products were ploughed into the equity markets. Asset managers are risking the funds on stock markets in Shenzhen and Shanghai. Some invested in corporate bonds and private placement. A total of about 7trillion yuan is invested into stocks, bonds as well as futures securities. 1.7trillion was invested in structured products. Bank executives were warned that borrowing spiked to cover for share market investment. Despite the share market volatility, equities are not riskiest. Private placement presents the highest risk. Banks are also funding out of balance sheet mezzanine financing, which is investing in shares of private companies via loans.

About 20% of assets from wealth management are invested into these types of financing. Good companies are targeted for the financing arrangement as it increases leverage risk. Risks have increase since the stock market crash and bubble is forming. Many see this as the only way for making profits due to low interest rate environment. Asset managers are finding it tough to find great investments. There are about 200billion excess funds with nowhere to invest except considering for share market. Moody's reported that weak share market could adversely affect bank's asset quality and profits due to weak stock lending and share market related custody services. Moody's expects more defaults on company debt as borrowers struggle on repaying their leverage. Wealth management as a whole should be revamped and risks are real.

Regulators have not been interfering with the investments. They have paid close scrutiny on funds raised from short term products in wealth management. These money are invested in long term projects which presents a mismatch. Asset management executives support more disclosure in investment products. Same rule and standardization should apply to the products similar to public funds. Retail investors ought to be protected by regulators by enhancing these measures. All regulatory bodies from China have pursued different goals and agendas and neglected on coordination. Each focused on their own segments. It is not effective due to loophole with different frameworks, especially in wealth management space. There are some who praise the innovative form of segmentation. Top policymakers have the ultimate power to pass through legislations for unification of regulations. There were examples of cooperation in the past. For instance, in 2003, CBRC as well as CSRC jointly instructed banks and asset managers to be more transparent in their pool of capital. However it still lacks results as banks tried to transfer out the capital by channeling to other companies.

Capital pool enterprise is closely linked to wealth management package for stocks and corporate bonds investment. CSRC allowed fund manager and broker to push and market wealth management package. CBRC followed suit for banks and CIRC launched similar wealth management package rules for insurance enterprises. Each regulator are doing their best on its own area of expertise. However unification is still yet to be implemented to standardize regulations in wealth management space.

Chinese New Year 2018, Year of the Dog, is on Friday 16th February.

The home for trading financial activities and the venues for financial service providers, to take part in their activities is a Financial Centre. The participants in this financial centers are Central Banks, Stock exchange, Financial intermediaries, etc. China's economy occupies a potent position globally in financial marketing, to meet the situation, several financial centres are strengthening their growth in the economy. The Vice president and the Chief Executive for Principal International, spoke recently with CIMB, Principal and gave an analysis stating that until 2003 China is not listed in the top twenties in World's Biggest Companies record, but that scenario was changed within a short period, and in the year 2009, five companies from China were added to the list. Fortunately, among those five companies, three companies are in the top five in the World's Biggest Companies list. This shows how tremendously China's economy is growing. The chief executive also stated that China is currently in the fifth position in the world in financial market. The chief executive with his experience expressed and highlighted that, China is following some growth models, with which it can contribute some percentage of its GDP to the growth. With this the demand for household goods increases, which results in the economic growth. He confidently stated that China will be in the leading position in its financial growth in upcoming years.

Structural Changes in growth model:

To reduce the regional disparities , growth needs to be more balanced in the economic development, where the comparison of the local and global and rising income inequalities may lead a rise in inflation. During the 2009 crisis, China remained strong with GDP growth as it is less dependent on its export markets. This made the remaining global markets to look at the Chine's growth model. The China's growth model report shows that there is a rise in the share of the investment in the government policies and a decline in private consumption. The reason for the fall in the share of GDP is high investment growth and weak employment growth ultimately resulted the labor income, further falls in national income and personal income. Both extreme levels made a fall in the share of GDP. In this situation the China took an active step by increasing the domestic consumption by generating employment opportunities and enhancing welfare, growth for its citizens and sequentially maintaining social stability. The consequences still worsened the China's economy for a short period.

Balancing the Economy by depending on Exports

China's re balancing growth at one level fell over 7% and 3% in the years 2007 and 2010 respectively. To some extent export and import played a recovery role, but only for a short period. When one compares the growth level of import and exports, the investment boom is strong and more for the export but it is lower than that of the import growth, the reason behind is China is weak in advanced country markets, this made the economy to absorb large amounts of China's imports. To adjust the economic imbalances China concentrated the foreign exchange markets to counter the growth imbalances. The statistical data says that in the year 2010, China accumulated nearly $448 billion of foreign exchange reserves. This trend continued in the 2011 first few months and it accumulated another $196 billion of foreign exchange reserves. On an average nearly $200 billion reserve accumulation was made by the economy in the next three quarter's highlights the Chinese Financial Centers and continued in the foreign exchange market.

Financial Development and Reforms

China's twelfth five-year plan gave more priority for the Financial development and reforms. In this contest China's government identified most effective financial system which can play an important role by bringing some of the changes like by increasing the production to reduce the inefficiencies in the market. China's introduced a reformed banking system and lend more small and medium sectors instead of large enterprises where there is less employment opportunities. This banking system worked wonders and there appeared a good development in the nonperforming loans, this significant change increased the assets. Secondly, China liberalized the interest rates as part in banking reforms. Currently the government imposed a ceiling on deposit rates. By analyzing all the areas if all the financial centers are regulatory and supervisory then China can lead a new global financial hub with Chinese characteristics.

The World Bank kept its forecast in Dec 2017 for China's 2018 and 2019 GDP growth unchanged at 6.4 per cent and 6.3 per cent.

China's membership status for European Bank for Development (EBRD) has been approved on 14 of December back in 2015. China has been a longtime stakeholder in many global development financial institutions. The EBRD has a different focus which is to spur development in private sector and promoting market economy democracy. China is stamping its mark on world finance by gaining membership status in differing global institutions. The rise of China is happening which mirrors the higher responsibility undertaken by China in global economic policy drafting especially in Eastern Europe as well as North Africa as part of EBRD operational region. G-20 and China's role to tackle the world financial crisis has helped fortify the basis for approaching China. Asian Infrastructure Bank (AIIB) and New Bank of Development (NDB) is a shining example of new outward strategy taken by China. The Silk Road Funds is also set up for the same purpose for China's ambitious plans to utilize the immense space between Europe.

The combined capital of US$150 billion from both AIIB and NDB will not have far reaching impact in terms of funding for infrastructure for emerging economies and countries. A conservative estimate puts the figure between US$ 1 to 1.5 trillion every year. Silk Road Funds, China Development Institution and CITIC will need to pump more funds, but there will be unmet needs and there are plenty of space for more initiatives. The new strategy undertaken by China will influence its behavior in other existing institutions, especially regional institutions. China is becoming frustrated for not having achieved its objectives for increasing role in global world finance and institutions, such as World Bank and IMF. ADB fell short of China's expectations. AIIB is a major roadblock and challenge to ADB.

China's engagement in these institutions is not just restricted to Asian region. For many decades China has played larger roles in Africa. Many Chinese development banks are all signing up for programs launched by Africa Development Bank. PBOC and Africa Development Bank announced a US2 billion Africa Growing Fund Together, with disbursement tenure over 10 years jointly financed by the two regions. China signed up as a member for Inter-American Bank for Development in 2008. It marks the increasing influence of Chinese ties with Caribbean and Latin America region. It has made co-investment contribution to the development bank. China started as a small insignificant shareholder, similar to EBRD, where it holds a 0.004% stake. Since 1985 from its first year of membership, China took part in eight new rounds of funding for the Africa Development Fund. China now has a 2.052% stake in the latest fund.

China semi government linked institutions and corporations are stepping a gear to engage with global financial establishment. China national wealth fund called State Administration for Foreign Exchange pumped funds into a IFC's Asset Management Company. The objective is to attract long term equity from institutions. It is the major investor in EBRD's similar instrument. Debt capital arrangement for funding is being considered.

Many things are yet to be learned as mentioned by Governor for PBOC. China has many to learn from general development to investment experience. Public and private partnerships formed rapidly around the country have been an easy method to avoid borrowing limits for local government. EBRD can offer much experience for PPP and it is a leaning ground for China. While China is still observing from the start and learning all it could, it will someday have to face the harsh truth around global financial establishment. They are heavily scrutinized by public and political pressure, and China has to navigate cautiously due to many sensitive political issues surrounding the institutions.

Some fear the uprising of Chinese financial maneuvers in the world. Despite heavy engagement and higher voting power, China will not change radically its operations for existing institutions. China can actually learn more by co-operating with global financial establishment and strive to invest better internationally and be more efficient in its capital usage locally.

China's Prime Minister, Li Keqiang has been so sure about the growth of Economic of China this year will reach their target. He admitted there might be a little obstacle which will prevent their improvement. But he does believe that it is impossible with a projection that said China Economy will fail their target this year. He and his administration staff pretty confident that they will achieve 6,5 until 7 percent raise as their target. This is contrary to the fact that these years the economy of China has been weakening very fast than the expected, didn't like many years in the past, which make China easily reaching the target of Economic Growth. The numbers of 6,5 percent to 7 percent actually lower than their usual target as the second biggest economic growth rate. Usually, they reach for 10 percent growth. Mr. Li also consider the economic growth for the next five years for within the average of 6,5 percent.

This projection has made the policy maker to wiggle a little. This percentage has some little higher expectations than the experts has predicted. The Chief of Economist of China at UBS AG, which is a financial services company from Swiss, Wang Tao, has said in a Beijing seminar that this year China Economic will growth about 6,2 percent. The prime minister is pretty confident, though there's a fact that the largest economic growth for China in second place last year just reach 6,9 percent, which is the lowest rate for this 25 years.

Prime Minister Li Keqiang, on the annual legislative this year has said that it was the crucial period for China to find itself. And they have to build their powerful drivers to accelerate the development of this new economy.

According to the sources, China has increased a growth on its debt. And this is having been clarified by Prime Minister Li Keqiang. He said that the factor of which cause this to happen is the global economy and overcapacity, also a low on demand at the market, especially for steel and coal industry. They have recover slower than he expected from the global economy problem. But he said again that they already find a method to handle this situation. He proposed the best way to handle this situation is to nurture a supply side economy. This concept will let the manufacture and the services provider be more competitive, but also give its good quality.

As for the steel and coal industry problem, they made a policy to trim the factory overcapacity and cut the employee. Though so, they would not be neglected by the government. He said that they have to provide 100 billion yuan to help the employee who has been layoffs because of this policy until next two years. These funds are intended to pay their severance and to funds the retraining program. It is noted that this year will be 1,8 million employees to be layoffs around steel and coal company.

On his speech on the annual legislative also criticize about zombie enterprise, which is the unproductive industry which is kept alive by the subsidies and the loan. He said that government will handle it in an active method, but also wiser with the use of merger, debt restructure, reorganizations, and also bankruptcy liquidations. He has set 10 million jobs to be generated in urban areas, and he will hold the unemployment until below than 4,5 percent in city areas. He also places an 800 billion yuan to invest in a railway construction and 1,65 trillion yuan to build the roads. He has targeted the deficit of the budget as much as 3 percent of gross domestic product for this year, which is higher than last year for only 2,3 percent.