Sichuan Protest Raises Fears for China’s $3 Trillion Trust Sector

Strains are emerging across China’s Rmb21tn ($3tn) trust industry, which has lured millions of ordinary investors seeking more profitable — but riskier — places to park their cash, the Financial Times reported. Dozens of disgruntled Chinese investors protested this week in Chengdu, capital of the southwestern province of Sichuan, after Sichuan Trust, based in the city, said the firm would struggle to make principal and interest payments on at least Rmb13bn worth of “trust of trust” vehicles due by the end of the year. The incident highlights growing stresses faced by China’s financial system as the coronavirus crisis exposes weak points in the world’s second-largest economy. Trust products have become a key part of the shadow banking industry, supplying funds for companies and projects that find it hard to get bank loans, while offering investors returns that stand well above rates available on regular bank deposits. Read more