The Chinese trust sector has once again set off alarm bells with the announcement that Zhongzhi Enterprise Group is declaring itself “severely insolvent.” The Beijing-based conglomerate has reported that it faces a shortfall of 260 billion yuan, the equivalent of $36 billion, and has warned of the risk that this poses to normal operations.
Zhongzhi is one of China’s largest shadow banks, private groups that provide financing through non-traditional institutions, such as trust firms and wealth management funds. Zhongzhi invests much of its investors’ money in real estate projects. The group’s situation, which has gotten gradually worse since the summer, once again underscores the…
