Chinese leaders fret over lurking debts

SHANGHAI/BEIJING/HONG KONG: In March 2013, retired chemical company employee Anne Xing, her older sister and their husbands visited a China Everbright Bank branch on the outskirts of Shanghai.

A private wealth manager at the bank had a special deal to offer them. "He said there is a high-quality product," Xing recalls. "Only elite customers can buy it. We asked him if there was any risk. He said there was no risk." The two couples sank about 5 million yuan (about $762,000) into the investment product, which offered 9.5 percent annual interest over two years - substantially higher than the 3.75 percent they could earn on a fixed, two-year deposit at the same bank.

Xing´s sister said she sold a property for 3 million yuan to fund her investment. The two families say they didn´t know exactly where the money was going at the time.

When the contracts arrived weeks later, it turned out they had entered China´s $9.8 trillion shadow banking industry.

By December 2015, the interest payment for the second year was already well overdue and the couples were worried.

"Then the sky came crashing down," Xing said. "The money was gone, a couple of million."

Everbright had actually sold the two couples a stake in Chang´an Trust Coal IndustryResource Investment Fund Three A Collective Investment Fund Plan. Their money had been lent to a coal miner that soon went bust. Ag Reuters