Explained: The reason why China needs its shadow banks now more than ever

How dependent is China on shadow lenders, and can regulators even get their arms around the 60 trillion yuan of shadow-banking assets (on paper)?

So much for deleveraging. China's biggest shadow lenders are back.

On the surface, it may look like regulators have managed to shrink the role of trust companies, after a wide-ranging, months-long crackdown on China's financial underbelly. Assets under management at these lightly regulated non-bank financial firms – a hybrid of private equity, asset management and lending – posted their first annual decline last year. Business revenue in the first quarter fell 5% from a year earlier. Broad shadow-banking assets fell 1.2 trillion yuan ($170 billion) in the first three months of this year.

But in reality, trust companies are back