BUSINESS Economic Watch: China's trust sector bets big on real economy opportunities

BUSINESS

Economic Watch: China's trust sector bets big on real economy opportunities

Xinhua

22:21, November 30, 2019

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BEIJING, Nov. 30 (Xinhua) -- Amid the overcapacity cutting campaign and price swings, the steel sector might not be a good investment target at first glance, but some financial institutions are hoping to strike gold amid the market's upgrading.

Via partnership with Zhaogang.com, a leading digital B2B platform in China that brings together steel producers and consumers, Bohai International Trust Co., Ltd. has launched a trust product that offers loans to steel purchasers to enable efficient deals on the platform.

Over 9,000 firms along the steel industrial chain have benefited from the trust product, which leverages Zhaogang.com's matchmaking services to enhance the steel sector's efficiency.

The trust firm has invested over 330 billion yuan (about 47 billion U.S. dollars) in manufacturing, infrastructure, energy conservation, environmental protection, industrial upgrading and other real economy fields, according to the company's president Ma Jianjun.

Like Bohai International Trust's investment, China's trust fund flows are shifting direction as the country keeps a tight rein on speculation and ups investment in the real economy.

China has stepped up regulation on irregular financial practices to forestall financial risks in recent years.

At the end of September, total entrusted assets balance of the country's 68 trust firms stood at 22 trillion yuan, down by 2.39 percent quarter on quarter, data from the China Trustee Association showed.

The trust fund balance in the real estate sector shrank by 148.07 billion yuan at the end of September compared with the end of June, the first quarter-on-quarter drop in over three years.

Industrial and commercial firms remained the biggest destination for trust funds flows. During the first three quarters, the sector saw new trust investment of 1.09 trillion yuan, accounting for about one-third of the overall new trust investment during this period.

The basic industries registered new trust investment worth nearly 140 billion yuan in Q3, up over 60 percent year on year.

"Serving the real economy is the trust sector's primary role," said Lai Xiufu, head of the trust institution supervision department with the China Banking and Insurance Regulatory Commission.

Lai said that despite enhanced regulation, the country's economic shift is "creating many fresh opportunities for trust firms" such as investing in the green sector and expanding direct investment.

Trust firms could play a unique role in supporting the real economy, as they can offer customized services by means of flexible investment tools while guarding against financial risks with advanced risk management technologies, Ma said.


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