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even more reports now of banks crashing
https://www.smh.com.au/business/mar...m-is-running-out-of-room-20200629-p5575r.html
China's financial system is running out of room
Despite deleveraging rhetoric, risks lurking in China's financial system are coming to the fore and starting to hurt a highly sensitive group: repressed savers. Eroding investor confidence and blockages in the allocation of money could become far more dangerous than previously. Beijing has few options but to backpedal on rules meant to clamp down on the unruly underbelly of its banking system.
The problems range from hotspots in the nearly $US3 trillion ($4.4 trillion) shadow lending industry to wealth management products that are posting their first losses. As COVID-19 strains household balance sheets, the strains are making for angry investors who want their money back.
China's economy has been crippled by the pandemic, and it may force officials to backpedal on plans to clamp down on the unruly underbelly of its banking system.CREDIT:BLOOMBERG
For Beijing, that's bad news. These were risks it was trying to contain through reactive rules laid out since 2018 and supposed to take full effect at the end of this year, aimed at reining in asset management and containing trust company funding, especially toward property investment. Now, regulators could find themselves squeezing lending channels at a time when they can't get credit flowing to the real economy.
The whole point of the slew of regulations was to remove implicit guarantees and duration mismatches on such products. That's exactly the problem at Sichuan Trust Co. Investors in its products are unlikely to get all their money back on 25.3 billion yuan ($5.2 billion) because the fund doesn't have enough to repay them, online media outlet Caixin reported recently. Regulators have said investigators found evidence of embezzlement by shareholders.
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https://www.smh.com.au/business/mar...m-is-running-out-of-room-20200629-p5575r.html
China's financial system is running out of room
Despite deleveraging rhetoric, risks lurking in China's financial system are coming to the fore and starting to hurt a highly sensitive group: repressed savers. Eroding investor confidence and blockages in the allocation of money could become far more dangerous than previously. Beijing has few options but to backpedal on rules meant to clamp down on the unruly underbelly of its banking system.
The problems range from hotspots in the nearly $US3 trillion ($4.4 trillion) shadow lending industry to wealth management products that are posting their first losses. As COVID-19 strains household balance sheets, the strains are making for angry investors who want their money back.
China's economy has been crippled by the pandemic, and it may force officials to backpedal on plans to clamp down on the unruly underbelly of its banking system.CREDIT:BLOOMBERG
For Beijing, that's bad news. These were risks it was trying to contain through reactive rules laid out since 2018 and supposed to take full effect at the end of this year, aimed at reining in asset management and containing trust company funding, especially toward property investment. Now, regulators could find themselves squeezing lending channels at a time when they can't get credit flowing to the real economy.
The whole point of the slew of regulations was to remove implicit guarantees and duration mismatches on such products. That's exactly the problem at Sichuan Trust Co. Investors in its products are unlikely to get all their money back on 25.3 billion yuan ($5.2 billion) because the fund doesn't have enough to repay them, online media outlet Caixin reported recently. Regulators have said investigators found evidence of embezzlement by shareholders.
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