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Investors in China Shadow Bank ‘Furious’ Over Payouts – Guardian

As investor anger and concern spreads through China’s $2.9-trillion trust industry, the popular belief that the government would “step in to resolve any financial instability” is starting to fade

New bank loans plunged in China in July.
Sichuan Trust was one of the first 'shadow banks' to fail after the property crisis began several years ago. File photo: Reuters.


Investors in Sichuan Trust are furious after being told that they have until March 5 “to accept a sliding scale repayment plan that would return 80% of capital to the smallest investors, while those who had invested more than 10m yuan (close to $278,000) would get back 40%”, according to a report by The Guardian, which said it was one of the first ‘shadow banks‘ to fail as China’s property market slumped into crisis in recent years and one of the more ‘trouble-prone’, having been fined 34.9m yuan in 2021 for making illicit loans and illegally transferring money to shareholders.

Some angry investors slammed the above offer as “legalised robbery”. And as strain spreads through China’s $2.9-trillion trust industry, because of the country’s economic downturn and tighter regulation of its ‘shadow banking’ sector there is a sense that China’s leaders “are not sympathetic to well-to-do” investors, the report said, noting that wealthy Chinese who used to put their money into property, the stock market or wealth management products now have nowhere to put their money as those sectors are all crashing and the popular belief that the government would “step in to resolve any financial instability” is starting to fade.

Read the full report: The Guardian.




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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years.


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