A major Chinese trust company has failed to make payments on wealth management products, according to multiple media reports, sparking further concerns about the health of the country’s economy.
Zhongrong International Trust failed to repay the proceeds of two high-yield products to carbon-based materials company KBC Corporation and real estate company, Nacity Property Service Group, amounting to Rmb60m and Rmb30m respectively, according to those reports.
FSA was not able to verify the missed payments.
Zhongrong International is part owned by Beijing-based conglomerate Zhongzhi Enterprise Group, which was founded by well-known tycoon Xie Zhikun, who died of a heart attack in 2021.
China’s $2.9trn trust industry, which comprises an important component of the country’s non-bank financial system, pools household savings to invest in the real estate, stock and commodities markets with the aim of providing depositors with a much higher return that they would get from parking their money in the bank.
The trust industry has strong ties to the country’s property sector in particular, which has been rocked by a regulatory clampdown in the past few years and recently saw Country Garden, China’s biggest private homebuilder, last week fail to make payments to its international bondholders.
There are also increasingly worrying signs from the broader economy after recent data revealed that China had slid into deflation, bucking the trend in most of the rest of the world.
