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Chinese trust companies are dumping risky assets: 5 things to know

Long a source of shadowy funding for developers, industry now faces reckoning

A real estate project under construction in Guangdong province, China in 2021. The government is clamping down on speculation and excessive debt in the property industry.   © Reuters

It was a tough year for China's trust companies in 2022, as many reported shrinking revenue or profits due to losses on their immense real estate investments, while regulators tightened scrutiny over the 22 trillion yuan ($3.2 trillion) trust industry.

Mounting nonperforming assets including risky loans on the books of trust companies -- many of them linked to real estate -- are likely to be of particular worry to Chinese regulators. At an April 28 meeting, the Politburo, the Communist Party's top decision-making body, called for authorities to make efforts to tackle risks in the trust industry.

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