China is boosting its efforts to control rampant credit expansion and strengthen wealth management in its economy.

The country is now looking to make its overseeing regulations more stringent. A new regulation involves banks, including their high yield wealth management into their overall credit. This will help the central bank in keeping an eye on all the products which may be used for the purpose of extending credit.

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According to The Wall Street Journal, a notice dated Oct. 20 revealed the latest policy act undertaken by the authorities. However, the central bank authorities refused to issue any comment on the report.

Recently, the government has undertaken various steps to control credit expansion. The growing debt level in China is being seen as a threat to the domestic as well as global economy.

The main challenge for China is to contain debt levels, without adversely affecting the growth of economy. A senior government advisor said the central bank is looking to scrutinize off balance sheet activities carried out by the banks, while maintaining "overall accommodative monetary stance."

The total amount of outstanding off balance sheet wealth management products is believed to be nearly $3 trillion, as of end of June. The new regulation will require the banks to allocate a portion of this $3 trillion to the same regulatory requirements which are applicable to other assets mentioned in its balance sheet.

Despite a large number of steps undertaken by the government, the debt level still remains a cause of concern. Total debt in China is believed to be well over 200 percent of its Gross Domestic Product, up from 125 percent it had at the end of 2008. 

TagsWealth Management Produts, Gross domestic product, china