2023-11-27 19:31:13
The situation surrounding one of China’s largest shadow banks is getting worse and worse. After the private asset manager Zhongzhi publicly apologized last week and described it as “seriously insolvent”, the authorities have now opened investigations against the group. The Beijing authorities announced this on social media. Criminal action was taken against several of those responsible. A person named Xie was explicitly named, the family name of the founder Xie Zhikun, who died two years ago. His relatives continue to be active in the company. The founder’s widow is the well-known Chinese singer Mao Amin, who allegedly refused the inheritance and gave it to her nephew.
Gustav Theile
Business correspondent for China based in Shanghai.
The customers were mainly rich Chinese who were attracted by the promise of higher interest rates but are now worried about their savings. There are pictures of protests by cheated investors holding up signs: “Zhongzhi, give us our money back.” A letter from an alleged employee is circulating on social media, which makes the whole drama clear.
Some of the customers are 80 or 90 years old and have invested their entire savings. A financial planner killed himself because he couldn’t take on the debt of his clients. Others were threatened by investors who were then imprisoned. The Beijing police now called on the population to cooperate in their Wechat post. Investors can send their documents to a white-collar crime unit or report on site themselves.
55 to 60 billion euros in liabilities
The Beijing asset manager caused a stir in the summer when it was unable to make some payments on time. Last week, the group published a public apology letter, according to which the liabilities amount to the equivalent of around 55 to 60 billion euros, but the assets do not even amount to half that. In this letter, Zhongzhi also described himself as “seriously insolvent.”
Gustav Theile, Shanghai Published/Updated: Recommendations: 5 Published/Updated: Recommendations: 53 Gustav Theile Published/Updated: Recommendations: 8
The shadow banking sector is an important part of the Chinese financial industry and is valued at around $3 trillion. Zhongzhi is one of the largest and most well-known players in the industry. It is a widely branched financial conglomerate with different business areas and investments. In the public letter, the company attributed its difficulties primarily to mismanagement after the death of the founder. However, the asset manager has also invested a lot of customer money in the ailing real estate industry, in which many companies are in trouble. Therefore, the impending collapse of Zhongzhi raises concerns about the stability of the entire industry.
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