Trust Backed by China Artworks Fails to Make Payments, News Says

A Chinese trust product that invested in paintings and calligraphy failed to meet principal and interest payments due in August after a slowdown in the nation’s gift-giving, China Business News reported.

The Citic Trust Co. product distributed by Industrial & Commercial Bank of China Ltd. raised 31 million yuan ($5 million) in 2011 and held 23 works of art as of the end of June this year, the news service said. An ICBC spokesman and a person who answered the phone at Citic Trust in Beijing declined to comment.

China’s expansion of shadow banking is posing risks to the financial system, while President Xi Jinping’s campaign to rein in official extravagance has damped spending on some luxury goods.