SHANGHAI: China's banking regulator told some lenders to lower the rates they offer on wealth-management products, people familiar with the matter said, as officials move to reduce financial risks and stimulate the economy.

 Banks, including some big lenders, received the order from the China Banking Regulatory Commission earlier this month, said the people, asking not to be identified as they aren't authorised to speak publicly, reports The Business Times.

 The requirement applies to on-balance sheet wealth-management products, which account for about a fifth of the nation's more than US$4 trillion of so-called WMPs, according to one of the people.

 Lenders had pushed WMP yields to a 17-month high in an effort to offset a funding squeeze caused by China's campaign against leverage. Chinese regulators are concerned that some banks may be passing on the higher funding costs to their borrowers, potentially threatening economic growth and stoking inflation.

 China "is reluctant to close the taps for funding in the economy through risky off-balance sheet products, but as a compromise is 'asking' banks to lower the interest rates on them," said Andrew Collier, an independent analyst in Hong Kong and former president of Bank of China International USA.

 "It is another clever way to try to reduce risk in the economy without shutting off credit." Financial and economic stability were key messages expressed by officials attending a once-in-five-year work conference last weekend.

China is grappling with how to ensure annual growth of at least 6.5 per cent this year, while reining in financial sector risks ahead of a leadership transition this fall at the 19th Communist Party Congress.