China’s securitization market expanded rapidly in 2014. Sales of asset-backed securities jumped to RMB 311.8 billion (approximately U.S. $50 billion) in 2014, twelve times more than the amount issued in 2013 and twice as much as the total amount of all securitizations in previous years combined. This explosive growth is expected to continue over the next few years. Such growth, however, was not built upon a rock as securitization in China is still at the stage of exploration and experimentation and the related laws are in a constant state of flux. “Crossing the river by feeling for stones,” a pet phrase which was frequently used to describe the Chinese economic reform, also captures the general approach that China has adopted toward securitization – it needed to stay grounded, incremental, feel its way forward even amidst uncertainty.
