Special products with names like Plentiful Money and Treasure and Rise High and Make Returns with Ease are hawked by salespeople at the China Merchants Bank branch on the Avenue of Eternal Peace in central Beijing.

Many of these popular products are collections of bank loans and other assets that have been “informally securitised” through lightly regulated Chinese trust companies and repackaged into financial products that offer decent returns with little apparent risk.

Even products with promised annual returns of up to 11 per cent – far above the benchmark one-year bank deposit rate of 2.25 per cent – are “almost without risk and very safe”, according to one eager China Merchants salesman.

Much of the blame for the global financial crisis has been placed on unfettered financial innovation in developed markets and a lack of basic understanding of increasingly complex financial instruments.

While some in China have been unable to conceal their delight at the humbling of western economies, many have been carefully studying how to avoid a similar implosion in China's fragile financial system.

So the sudden emergence of a virtually unregulated market for “securitisation with Chinese characteristics” and off-balance sheet bank lending has created alarm among financial officials in Beijing.

From virtually nothing two years ago, the outstanding balance of these off- balance sheet loans had grown to more than Rmb2,300bn ($339bn) by the end of June, with more than Rmb1,300bn issued in just the first six months of this year.

This is not a huge number compared with the nearly Rmb45,000bn in total outstanding loans in China, but regulators are most concerned about the rapid proliferation of these products in recent months.

In June alone, 33 banks and 38 trust companies issued 568 such products with a total combined value of Rmb890bn, according to research and consulting company Use-trust.

That far exceeded the Rmb603.4bn official on- balance sheet total increase in new bank loans during the same period.

Early last month the China Banking Regulatory Commission imposed a temporary ban on the trust company products that allow banks to move loans off their balance sheets and evade strict government lending quotas.

Earlier this week the CBRC ordered banks to shift the Rmb2,300bn in off-balance sheet loans back on to their books, recalculate their capital adequacy ratios and increase provisioning to take account of the extra lending.

China's state-controlled banks are already in the process of raising an estimated Rmb350bn from share and bond sales to the state, existing investors and the public.

But analysts say some lenders may be forced to go back to the market for more once they have accounted for this off-balance sheet lending. That may be difficult as equity markets have been weighed down by the sheer volumes of money being raised by Chinese banks and the biggest subscriber to bank share sales has itself had to turn to bond markets to fund its purchases.

Central Huijin Investment, the domestic arm of China's sovereign wealth fund, which holds most of the government's majority stakes in Chinese banks, is planning to sell as much as Rmb190bn in bonds in the coming months to buy new bank shares, according to some reports.

But concerns about the health of the banking sector have been raised by the fact many of Huijin's bonds are likely to be bought by the banks themselves, thereby inflating the balance sheets of all institutions without introducing new funds into the system.