BEIJING (REUTERS) - The assets and risks of China's "shadow" banking sector have declined significantly through continuous regulation, the state-run Securities Times on Saturday (July 30) quoted a top regulator as saying.

The sector has shrunk by more than 29 trillion yuan (S$5.9 trillion) as of the end of June from its historical high, Mr Liang Tao, vice-chairman of the China Banking and Insurance Regulatory Commission, was quoted as saying.

He did not specify when the peak was.

Mr Liang warned of high hidden risks, however, as some products have complex structure and high leverage levels, the newspaper said.

People should be vigilant over a rebound of shadow banking risks, as some institutions may use improper financial innovations to create new variants of shadow banking, said Mr Liang.

China has been clamping down on shadow banking, concerned about the hidden risks in the high volume of complex and potentially risky loans in the sector.

But as a weakening economy puts pressure on businesses and individuals, the authorities fear shadow lending and illegal loans may surge.