Some investors in a troubled Chinese trust fund are facing financial ruin under a government plan to return a fraction of their money back
Plainclothes 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.
For the people who put their life savings into Sichuan Trust and similar entities, it's likely too late. Around 300 of more than 8,000 investors refused to accept a government plan and are looking for legal help, a relative of one investor said. A few who attempted to come to Beijing during the congress to air their grievances were blocked by police, the relative said.
Trusts are a cross between a bank and an investment fund. Some advertised their offerings as reliable, high interest government-backed accounts. They're actually private entities that fund projects like factories and shopping malls. Weak disclosure requirements allowed them to use money from new investors to pay what they owed earlier ones, a set-up somewhat like a Ponzi scheme.
Hundreds of investors staged weekly protests outside the company’s headquarters and their losses became a political issue. The plan to return funds “appropriately favors small and medium-sized investors,” Sichuan Trust said earlier in a public statement, calling it “fair.” “They abduct you, they threaten your children,” said another investor, who also did not want to be identified due to fears of more police harassment. “They have so many dirty tricks.”
However, some investors were retirees who said they met the investment threshhold by collecting money from friends and relatives who now want their money back. For them, Sichuan Trust’s default is a calamity.
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