Tiongkok Shadow Banks that liquidate, why hah?

[k1976]

Chinese shadow bank Zhongzhi's liquidation prompts fallout fears​

Liquidator seeks consolidation in 'complicated' case with 'enormous' debts

The Zhongzhi Enterprise Group office building in Beijing is the apex of 247 related companies that the liquidator would like to treat as a single entity for the benefit of creditors. © Reuters

KENJI KAWASE, Nikkei Asia chief business news correspondent
July 2, 2024 19:10 JST

 

[k1976]

https://www.bloomberg.com/subscriptions?in_source=nav-mobileweb

China Shadow Bank That Oversaw $108 Billion Faces Liquidation​

Zhongrong International Trust Co. was placed in custody in late 2023 after missing payments on multiple trust products.
Source: Bloomberg
By Bloomberg News
15 April 2025 at 2:00 PM SGT
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Takeaways NEW​

Zhongrong International Trust Co., one of China’s largest shadow banks before it defaulted on billions of dollars of wealth products, is facing liquidation after its two state-appointed custodians concluded the firm is insolvent, according to people familiar with the matter.

A winding-up proposal for Zhongrong, which had 786 billion yuan ($108 billion) of assets under management as of 2022, was recently submitted to regulators by Citic Trust Co. and CCB Trust Co., said the people, asking not to be identified as the matter is private. No final decision has been made by the authorities, the people said.


https://www.bloomberg.com/tips/

 

[k1976]

What are shadow banks and why are they failing in China?​

Copyright Vincent Yu/Copyright 2021 The AP. All rights reserved.
By Indrabati Lahiri
Published on 27/02/2024 - 6:15 GMT+1
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European investment in China is under threat as the country's shadow banks face crisis.​

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Chinese trusts and wealth management companies have been struggling under the weight of tightening regulations and China's persistent property crisis - two phenomena that have hit the country's 'shadow banking' industry particularly hard and could have knock-on effects for Europe.

Shadow banks, such as Sichuan Trust and Zhongzhi, are non-bank financial institutions, such as credit guarantee companies, hedge funds and asset management companies, that provide some of the key services of banks despite not being traditional lenders.

 

[k1976]

The rules governing regular banks that their shadowy counterparts are exempt from include things such as meeting certain capital reserve requirements, transparency requirements and performing thorough background and credit checks in certain instances.
The shadow banking industry can be key to propping up a country’s economy, due to often filling a gap that traditional commercial banks leave: for example, traditional banks usually shy away from issuing risky, high-interest short-term loans based on an applicant's upcoming paycheque, whereas shadow banks can be quick to lap them up.
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Why are China’s shadow banks failing?​

In China, the shadow banking industry accounts for about 40% to 60% of the country’s gross domestic product (GDP), although estimates vary significantly.

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Back in November 2023, one of China’s biggest asset and wealth management companies, Zhongzhi, revealed that it was “severely insolvent”, having liabilities of about 460 billion yuan (€59.0 billion).
By contrast, the firm’s assets only came up to around 200 billion yuan.
In a letter to shareholders at the time, as reported by The Guardian, Zhongzhi said, “ The group deeply apologises for the losses caused to investors. We fully understand the urgency, importance and seriousness of resolving this overall risk”.
The company blamed this situation on the exodus of a number of senior executives, which in turn, severely disrupted internal management. However, experts believe the underlying Chinese property crisis could be the real reason behind China’s shadow banking industry struggle at large.
This is because much of the funds that shadow banks earn from selling investment products are then funnelled to the country’s vast property sector. However, in the past few years, this sector has been on the brink of collapse.
One of the main causes of the property sector crisis was when one of the biggest Chinese property developers Evergrande defaulted on its bonds back in December 2021, triggering a chain reaction across other major real estate developers such as Country Garden.
Tighter regulations, such as a limit on property developer debt levels, have also added to this crisis.
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Back in March 2023, according to Japanese bank Nomura, about 7% of Chinese trust fund assets were exposed to the property and real estate sector. This was estimated to be about 1.13 trillion yuan. However, due to the lack of transparency in this sector, the actual figure could be much larger.

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In May 2020, another trust, Sichuan Trust, also admitted a deficit of about 20 billion yuan, which was later thought to be as much as 30 billion yuan.
Although the company also blamed this on the tighter regulatory environment, there had been several concerns about the company in recent years. These included questionable practices such as illegally transferring money to shareholders and illicit loans.
As reported by The Guardian, Diana Choyleva, chief economist at Enodo Economics said, “Sichuan Trust was one of the earliest to fail. But its issues are broadly representative of issues that face the whole industry because of the rolling crisis in real estate.”
Real estate developers in China can often find it difficult to borrow large amounts of funds from traditional commercial banks, due to them being seen as riskier companies. This has led to them relying heavily on trust for the required financing.

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Choyleva explained that Chinese trusts heavily invested in the property sector will likely need to alter their business approach over time.
“They may shift their financing to the government’s preferred industries, such as hi-tech manufacturing,” she said. “But banks are much more willing and able to lend to these companies than they were 20 years ago, reducing the demand for trust products.”
“As the potential investment returns in this area are much more uncertain than during the peak years of property growth, the attractiveness of their products to retail investors will also decrease,” Choyleva added.
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The rise of fintech lending in China is also threatening the shadow banking sector.

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It allows a wide variety of apps, including non-finance-related apps such as the microblogging platform Weibo and news aggregator Toutiao all offering micro-lending packages.
With loan applications being easy and very fast, several borrowers may take out multiple loans simultaneously, eventually leading to default.
The almost instant nature of these loans also means that most companies don’t have the time to properly vet borrowers and establish safe lending practices.

How could China’s shadow banking industry woes impact Europe?​

The European Union is heavily dependent on China as an import and export partner.

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In 2022, the EU’s top imports from China included telecommunications equipment, automatic data processing machines and electrical machinery, according to Eurostat, the bloc's statistical office.
On the other hand, some of the top exported goods from the EU to China included motor vehicles and electronic tubes and valves.
The wavering of the shadow banking industry could go much beyond the financial sector, potentially impacting European foreign direct investment (FDI) in the country as well.
Currently, the food processing, automobile, pharma and biotech, consumer products manufacturing and chemicals sectors are some which see the most FDI in China.

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Companies like Volkswagen, Daimler, BASF and BMW are heavily invested in China. However, the collapse of several Chinese trusts can also mean less demand for European products, especially in the consumer products and automobile sectors.
Furthermore, if shadow banks start to wind back their investments in the property sector, this could also lead to fewer incentives for European companies such as cheap land and facilities such as massive industrial parks.
As such, China may not remain such an attractive investment option for European companies anymore, who may have to find other cheap Southeast Asian manufacturing options then.
The tightening regulations impacting shadow banks could also deter more European investment in China, especially as both the EU and China are working on methods to increase self-reliance currently.

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One of these includes attempting to produce high-demand goods such as electric vehicles entirely domestically, without relying on foreign supply chains.
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[k1976]

https://www.bloomberg.com/news/videos/2025-04-09/the-danger-of-basis-trades-and-shadow-banks-video

 

[k1976]

With Trump Tariff war, all global trade tanked, shadow bankers in hot soup??

 

[k1976]

Where is world shadow bankers hub?

 

[syed putra]

Merging with bigger anchor banks.

 

[k1976]

Merging with bigger anchor banks.

Bao Jiak by Big 4?

Then those foreign small big bosses who put $$$$ insai these shadow bankers investment vehicle how???

 

[k1976]

Khaled: President Xi's visit to Malaysia not linked to US tariff row​

By Nor Azizah Mokhtar, Muhammad Asyraff Hafizi
April 15, 2025 @ 6:32pm

The Jalur Gemilang and the Chinese flag were put up around Dataran Putrajaya in conjunction with Chinese President Xi Jinping's three-day state visit to Malaysia. - BERNAMA PIC
KUALA LUMPUR: The official three-day state visit by Chinese President Xi Jinping to Malaysia, from today until Thursday, is unrelated to the recent tariff hike imposed by the United States (US), says Defence Minister Datuk Seri Mohamed Khaled Nordin.

He said that the visit had been scheduled well in advance and was not, as some have speculated, a surprise move.

"A visit by such a prominent leader is never arranged at the last minute. It is meticulously planned over several months," he said.

"This visit has no direct link to the recent tariff issue. When it was first arranged, we did not foresee the tariff matter becoming a hot topic. Therefore, it should not be viewed within that context."



Khaled told reporters this after attending the Defence Ministry's Aidilfitri celebration at Dewan Seroja, Kementah Camp, earlier today.

 

[syed putra]

Bao Jiak by Big 4?

Then those foreign small big bosses who put $$$$ insai these shadow bankers investment vehicle how???

Upon merger, all bad debts already vapourised. Investors interest considered as losses.

 

[k1976]

What does he mean by Ming Dynasty lesson?
Bo Jiak later AMDk Lai Jiak?

In summary - Can eat Douch Waste?

As Xi Jinping visits Malaysia, lessons from the Ming dynasty could be useful​

Trump’s trade war and his imperialistic rhetoric should prompt the Global South to unite in favour of an approach that prioritises engagement

 

[k1976]

As Chinese President Xi Jinping visits Southeast Asia, a lesson from the Ming era remains relevant. Without united and open engagement, the Global South risks falling once again to imperialist subjugation.


Following a stopover in Vietnam, Xi arrives in Malaysia on Tuesday on a state visit before concluding his Southeast Asian tour in Cambodia. This three-nation trip comes at a pivotal moment as both the region and the broader international community continue to grapple with the repercussions of US President Donald Trump’s disruptive tariff war. In Kuala Lumpur, Xi and Malaysian Prime Minister Anwar Ibrahim are expected to reaffirm their commitment to working together in response to the escalating global economic crisis.


In late March, with Trump’s tariffs looming, China, Japan and South Korea agreed to continue trilateral economic and trade cooperation. Next month, Malaysia – as chair of the Association of Southeast Asian Nations – will host the Asean-Gulf Cooperation Council summit as these regional blocs move to strengthen their economic cooperation. China has been invited to the summit as a guest.

 

[k1976]

The expeditions of admiral Zheng He hold special significance in the China-Malaysia relationship, having laid the historical foundation for the countries’ modern ties. This era coincided with the golden age of the Melaka Sultanate, which emerged as a thriving hub of international trade, drawing merchants from the Middle East, South Asia and East Asia.


A little-known fact about Zheng He is his Hui Muslim heritage. The admiral’s background highlights the rich cultural diversity of Ming China, where Islamic and Confucian traditions coexisted. Some historians even credit his voyages with contributing to the spread of Islamin Southeast Asia.

 

[k1976]

If China send another Cina in among Dynaaty…Malaysia will be a Buddhist kingdom today???

 

[Willamshakespear]

It is good to refer to History as lessons, as History often repeats itself.

However it is far more critical to learn the REAL lessons of history than to blindly rely on cherry picking irrelevant historical incidents to justify the actions of today.

The CCP govt of China is NOT the benevolent Ming dynasty of Han ancestors.

 

[face the facts]

cheebye lah, shadow banks in the west is just called hedge funds,
i been a bank treasury trader for 40 years