Why China’s $3.9 trillion trust industry is sparking fears of contagion

TOKYO – Chinese regulators have sought for years to get to grips with the US$2.9 trillion trust industry, a corner of the country’s shadow banking sector that offers bigger returns than regular bank deposits but can be fraught with risk. Their fears were underlined in August when

One of its most important investments is a 33 per cent stake in Zhongrong Trust, which has 270 products totaling 39.5 billion yuan coming due this year, according to Use Trust data. The average yield on those products amounted to 6.88 per cent, compared with the benchmark 1.5 per cent one-year deposit rate paid by banks.Three firms said on Aug 11 that they had failed to receive payments on products issued by companies linked to Zhongzhi, including Zhongrong.

President Xi Jinping’s government is under pressure to shore up confidence in China’s economy. Investors have been alarmed byand persistent weakness in its giant real estate sector.

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China firms say didn't receive payments due from Zhongrong TrustSHANGHAI : Two Chinese listed companies said over the weekend that they had not received payment on maturing investment products from Zhongrong International Trust Co, adding to stress in a financial market already roiled by a property sector downturn.The disclosure could deepen market concerns over the h
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