Efforts to crack down on shadow banking are beginning to bite. The Oriental Pearl Tower is seen at the financial district of Pudong in Shanghai. Photo: Reuters/Aly Song

China’s campaign to reign in excess leverage in the country’s financial system took a toll in April, reports Bloomberg.

  • Issuance of wealth-management products down 39% in April from a month earlier, trust products down 35%
  • Sale of negotiable certificates of depostit, an interbank lending instrument, tumbled 38%
  • Efforts to bolster risk controls and crack down on senior bureaucrats hope to diminish the estimated US$28 trillion debt pile
  • Government betting that growth momentum to start the year can absorb the negative impact of deleveraging
  • Moves led to stock market rout, erasing more than US$300 billion of equity market value
  • Q1 bank results showed interest margins for some smaller banks contracted, while margins for net lenders on interbank market expanded