There was a thaw in relations in mid-2013 when China offered to release audit working papers on the companies concerned, but only on a case-by-case basis. But the divergences between the two styles of regulation are still wide.
But back to China's shadow banks, the government doesn't want to squash the industry. In fact the authorities praise the trust companies for their enterprise and innovation. But echoing the concerns of western regulators, document no. 107 warns that "vulnerabilities can emerge suddenly and spread easily causing systemic problems".
Until Chinese regulators learn more about the interbank market, current levels of overdue or at-risk loans and the true state of some local governments' finances, many western observers are reserving their judgement on the degree of threat presented by the shadow banks. Meantime some are predicting a few failures in 2014.
Selwyn Parker is an author of books on finance and business topics, a specialist in financial history, and regular contributor to newspapers and magazines. Based in Spain, France and the UK, he focuses mainly on European developments. His latest book, The Great Crash, is a new history of the Great Depression that among other things explains the rise of regulation in the form of the SEC and related authorities. Selwyn is a regular contributor to Wolters Kluwer Financial Services' Compliance Resource Network