China’s financial regulators are beginning to look like tugboat captains on a speedboat. They have the right instincts for steering their vessel – the country’s markets – in the desired direction, but the engine is proving more powerful than they at first thought.

Their objective is a smaller banking sector, one that is less dominant in China’s financial system. At present, banks account for 80 per cent of corporate financing in China, according to official data, well above the norm of 50 per cent or less in other countries – be they developed or developing.

These regulators have a carefully charted plan to reach that destination. But powerful market forces are now propelling China along this course far more quickly than intended and creating new, dangerous risks in their wake.