China's top auditor is conducting a review of the U.S. $3 trillion trust industry, paving the way for a potential overhaul of a key shadow banking sector where losses on property loans are mounting, Bloomberg News reported. In an unscheduled move, the National Audit Office - which previously led an examination of bank exposures to Mr. Jack Ma's Ant Group - has for the past month been inspecting the books of at least 20 trust firms, including the top five, to gauge the risks they pose to financial stability. The firms are being asked to report on their risky loans to developers and any plans to dispose of them. The audit office is expected to submit its conclusions to policymakers in Beijing, who may decide on the future reforms of the sector. While it is unclear what regulatory action the scrutiny will spur, the move illustrates how concerned the authorities are about contagion from the property sector destabilising the financial industry. Trust firms have this year defaulted on about 58 billion yuan of investment products linked to property developers, which were sold to wealthy Chinese, according to industry data tracker Use Trust. Read more.