Wealth management set to grow

Analysts call for tighter supervision to avoid risks

China's wealth management market has a promising future as more individuals see the need to manage their growing assets, officials and experts said at a forum held in Qingdao, East China's Shandong Province over the weekend.

The rise of the middle class in China will not only push the transition of the Chinese economy but also drive growth in wealth management, Michael Spence, a Nobel laureate in economics, said on Saturday at the forum.

These middle-class families are in need of more reliable and efficient investment outlets to maintain and increase the value of their assets, Spence said.

Currently, a substantial amount of China's deposits flow to the property market, Edmond Alphandery, a former French finance minister, remarked at the forum, suggesting that the market offer more diversified and well-designed financial investment products.

Responding to the rising demand for wealth management in the country, a new financial pilot zone for wealth management was approved in Qingdao in February to encourage innovation in the industry.

The decision to initiate the pilot zone is filled with hope that Qingdao's experiment could be extended to other parts of the country, Pan Gongsheng, a deputy governor of the People's Bank of China, the country's central bank, said on Saturday.

The country's wealth management market has grown at a rapid pace in recent years, totaling 12.8 trillion yuan ($2.08 trillion) by the end of May, according to Pan.

It is expected that the economy will maintain a stable growth in the foreseeable future and therefore personal wealth will continue to grow, making it critically important to ensure the maintenance and appreciation of wealth accumulated by individuals, he noted.

But it is also equally important to pay attention to supervision of wealth management to avoid the emergence of default risks, analysts say.

The wealth management products that function similarly as deposits should be subject to same rules as imposed on banks, such as setting aside reserve requirements, to safeguard investors, Lee Jih-chu, chairwoman of Bank of Taiwan, told the Global Times on Saturday.

Investors also need to be aware of the risks of wealth management products, which may not always guarantee the principal, Wu Xiaoling, vice chairperson of the Financial and Economic Affairs Committee of the National People's Congress, said at the forum.

An exposure of potential risks involved in various kinds of investments may also help direct more capital into the development of real economy, Wu stressed.