Until last summer, there were few concrete links between a slowdown in China’s property sector and a domestic shadow banking industry that has for years supplied middle-class savers with high-interest products.
But that suddenly changed in July when longstanding wealth management group Zhongzhi ran into payment difficulties, making it the focal point of concerns about a potential spillover from a real estate cash crunch that has since worsened.
In the intervening six months, the conglomerate has unravelled. In November, it admitted it was severely insolvent and its management had “run wild” in the wake of its founder’s death. Recently, it declared bankruptcy.
While developer Evergrande was for years the subject of warnings over a…
