Official data released Wednesday show that China’s trust industry is scaling back a risky lending practice called “channeling,” where a trust company helps an investor put customers’ deposits into high-yield financial products to achieve higher returns. The drop in “channeling” could be a sign that China’s clampdown on financial risk is starting to bite, according to Caixin Global.
The total volume of assets managed by China’s 68 trust companies via “channeling” totaled $2.3 trillion as of the end of April, according to data from China’s banking and financial regulator, which is a 4.3% drop compared to the end of 2017.
The decrease brings to an end the extraordinary growth in “channeling” that took place between 2013 and 2017 in China, when trust companies’ channeling assets increased from $160 billion to $2.35 trillion
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