Market News International:

I have two questions about the data. The social financing data released by the central bank shows that the figure for bad loan write-offs is different from that given by the China Banking and Insurance Regulatory Commission. Why for this? In addition, what is the approximate proportion of entrusted loans, trust loans, and bill financing - all categorized as social financing - combined in the total shadow banking? Could you please introduce the overall size of China's shadow banking? Thank you.

Chen Yulu:

Thank you. You have studied our data very carefully. Ms. Ruan will answer your questions involving the structured data.

Ruan Jianhong:

Let me start by answering your first question. As you noted, according to data released by the People's Bank of China (PBOC) on aggregate social financing, the volume of loans written off amounted to 764.4 billion yuan in the first three quarters of 2020. During the same period, the disposal of non-performing loans reached 1.7 trillion yuan, according to data released by the China Banking and Insurance Regulatory Commission (CBIRC). The two figures released by different sources do not match exactly, since the former is part of the latter. Apart from write-offs, non-performing loans can be disposed of through other means including transfers, payments-in-kind and securitization.

Regarding your second question, you asked whether the aggregate social financing data includes shadow banking businesses. In fact, entrusted loans and trust loans, which we frequently mention, are not all covered by shadow banking. For example, entrusted loans under the housing provident fund scheme are not shadow banking activities. Current aggregate social financing data show that entrusted loans and trust loans totaled 12 trillion yuan, not including the 5.4 trillion yuan of housing provident fund loans.

Shadow banking refers to activities performed by credit intermediary institutions outside the banking system, which are subject to lower levels of regulatory oversight and higher risks, such as some private equity funds, part of entrusted loans and trust loans, non-standard asset investment by financial products, and so on. The volume of these businesses, after removing double counting, currently stands at about 32 trillion yuan, which is 2 trillion yuan lower than at the end of 2020. Thank you.