Zhou Xiaochuan, governor of the People's Bank of China, urged alertness to potential risks, especially shadow banking, as banks diversify financial products and services.
Shadow banking, as the name suggests, mainly refers to credit access outside the regular system. In China, it usually involves wealth management products, underground finance and off-balance-sheet lending.
"Shadow banking is inevitable when banks are developing their business," Zhou said. "But there are fewer problems here than the shadow banking sector in some developed countries that have been hit by the global financial crisis."
In an article for China Daily published in October, Xiao Gang, chairman of Bank of China, said that shadow banking was like a Ponzi scheme.
A Ponzi scheme is a fraudulent investment operation that pays returns to investors from their own money or the money paid by subsequent investors.
Chinese banks are also priming themselves to steadily expand international business as the yuan becomes more of a global currency.
Industrial and Commercial Bank of China plans to increase the number of international branches as it focuses on mergers and acquisitions to become a multinational group, Jiang Jianqing, the bank's chairman said. The lender is the world's largest in terms of market value.
"The growth in the overseas market is even faster than domestic business," Jiang said. The bank, he said, has earned $864 million from its overseas operations in the first half of this year.
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