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China takes on local governments over financial asset exchanges

Trading platforms have emerged as new risk to economic stability

China's local financial assets exchanges, or FAEs, have a relatively short history.   © Reuters

As infamous corporate raider Shenzhen Baoneng Investment Group searched for ways to fund its ultimately doomed expansion into finance, property and new-energy vehicles, its own employees were encouraged to invest.

The group, which collapsed last year under a 200 billion yuan ($31 billion) mountain of debt, set up a platform on its internal network called "Employees Win." Clicking on the icon gave staff direct access to five local financial asset exchanges (FAEs) across the country where they could buy wealth management products issued by Baoneng-linked companies.

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