The property sector in China, which once accounted for about 30 per cent of the countrys GDP, is deeply connected, not just to its banking system, but its shadow banking sector, or trust industry.
The trusts raise funds from households and companies by offering far higher returns than conventional banks (as much as 8 per cent versus the less than 2 per cent on offer from the banks) which they then invest in a range of assets, including stocks, bonds and commodities and the financing of property developments.
Chinas property sector has been reeling since Xi Jinping imposed his three red lines limits in 2020.Credit: AP
The $4.5 trillion sectors official exposure to property is claimed to be only about $235 billion but, given the com…
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