Assets under management by China’s trust industry grew by 46 percent during 2013, as the industry — and seemingly the nations’s investors managed to shrug off the potential for default in the country’s loosely regulated shadow banking industry.
The China Trustee Association said in a statement on its website on Wednesday that assets under management by the industry in China now amount to RMB 10.9 trillion ($1.8 trillion), up 46 percent from the level in 2012.
“Risks are Impossible”
Noting that asset quality is “quite sound and systemic risks are impossible” the Association, which helps to promote the use of wealth management products offered by China’s trusts, said that only around RMB 20 billion of trust products had repayment difficulties in 2012, amounting to about 0.27 percent of the industry’s assets at that time.
The revelations from the industry group come after government media reported on Wednesday that Jilin Province Trust Co Ltd had failed to repay investors for $126 million worth of trust products which matured in recent weeks.
China averted its first trust default in at least a decade last month as investors in a 3 billion-yuan high-yield product issued by China Credit Trust Co. were bailed out days before it matured.
More Trust Payments Due This Year
According to an estimate by Haitong Securities last month, about 5.3 trillion yuan of trust products will mature this year, up from 3.5 trillion yuan in 2013.
Many real estate developers who are no longer able to secure standard loans through government banks in China, due to tightened credit criteria designed to prevent a housing bubble, have become increasingly reliant on the shadow-banking industry and its trust products to fuel their projects.