China's financial system used to be bothersome but simple. The bulk of savings were deposited in state-owned banks, which extended most of their loans to state-owned enterprises (soes). When things went wrong, the banks enjoyed bailouts from taxpayers and from depositors, who had nowhere else to go. Today China's financial system is still bothersome, but it is no longer simple. Savers can choose between traditional deposits (which pay capped interest rates) or a bewildering variety of "wealth-management products" (wmps) offered by lightly regulated trust companies and asset management firms, as well as banks themselves. Borrowers can raise money from a fast-growing bond market, trust companies, or other firms, which make "entrusted" loans via a bank. As a last resort, they can also turn to kerbside creditors.
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