The shadow banking system in China reminds leaders of the United States around 2005 — but China’s shadow banking is larger, more top-heavy, and less susceptible to centralized control. Authorities hope that reforms and arrests will prevent a sudden collapse in the future. From Reuters:
The danger is that a big default or series of loan losses could cascade through the world’s second-biggest economy, leading to a sudden halt in bank lending.
Top leaders in Beijing have acknowledged that the colossal volume of complex and potentially risky lending obscured in shadow banking compounds the threat posed by the economy’s tremendous accumulation of debt since the global financial crisis.
The full story is a long read at Reuters that may serve as a snapshot of the current state of the shadow banking system in China: