Some investors in a troubled Chinese trust fund are facing financial ruin under a government plan to return a fraction of their money back.
Don’t miss out on these fabulous Insider DealsPlainclothes policemen have a chat as they stand watch outside the barricaded Sichuan Trust office building in Chengdu in southwestern China's Sichuan Province on Feb. 27, 2024. Some investors in a troubled trust fund in China are facing financial ruin under a government plan to return a fraction of their money, casualties of a slump in the property industry and a broader economic slowdown.
“Nobody wants to absorb the loss. If you assign it to households, you weaken consumption even more,” Pettis said. “It’s got to be assigned. And that’s the political problem." That summer, Sichuan Trust announced it had 25.3 billion RMB in debts it couldn't repay. The provincial government and banking regulators took control, ousting the management, reorganizing its books and launching an investigation.
A person answering Sichuan Trust's hotline said the company does not take interviews and would not provide comment. Sichuan Trust, the Sichuan provincial government and the China Banking and Insurance Regulatory Commission did not respond to faxed and emailed requests for comment. Analysts say investors were bound to suffer big losses given the size of Sichuan Trust’s debts. Chinese media have reported on the problem, but focused on alleged wrongdoing by those who ran the trust, presenting the repayment plan as a fair solution.
“They’re so poor, they don’t have money to spend,” said a relative of investors who lost money to the trust. “They don’t have money for medical treatment. They have to borrow money to survive.”
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