Steve Vickers discusses the crisis in China’s trust sector - What happens Next?
Zhongzhi Enterprise Group's failure to pay out is just the latest event in a slow-motion crisis now under way in the Chinese property and financial markets, exemplified by the insolvency of China Evergrande Group on 17 August 2023. The default has also made it crystal clear that any failure to examine the structure of investments, or to conduct rigorous due diligence can, and usually will, lead to substantial losses for investors.
This is not a localised situation affecting Chinese enterprises only. Financial contagion is now a risk, and the Chinese government may well tighten capital controls if the situation worsens - not least as some trusts have moved vast funds offshore. Should it do so, then permission for the movement of funds out of China may become much harder to secure than presently for foreign firms.
Please click the link below for the RTHK Radio 3 interview: