China Braces for $38 Billion in Losses in Troubled Trust Sector
- Financial firm Zhongzhi’s troubles spark contagion concerns
- Trust industry emerges as latest threat to fragile economy
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China’s $2.9 trillion trust industry is emerging as yet another threat to the world’s second largest economy.
After being restructured at least six times since its inception in 1979, the sector is facing another round of losses that Goldman Sachs Group Inc. analysts say may swell to the equivalent of $38 billion. Private wealth giant Zhongzhi Enterprise Group Co. and its affiliate Zhongrong International Trust Co. have halted payments on scores of high-yield investment products since last month, even sparking rare protests in Beijing.