China’s property debt crisis shows no signs of receding and has even spread into the country’s shadow banking. This week, Zhongzhi Enterprise Group, a privately owned manager of more than 1 trillion yuan ($137 billion), and its trust company affiliates are under scrutiny after halting payments to thousands of customers on high-yield investment products offered by the company.
Zhongrong Investment Trust, a trust firm closely linked to Zhongzhi, is a top-10 trust company that pools deposits from investors and companies to invest in stocks, bonds, and other assets while lending to companies that can’t access traditional banks. According to Bloomberg Economics, the trusts account for almost 10% of total loans in China. According to data provider Use Trust, Zhongrong has 270 investment products totaling 39.5 billion yuan due this year.
