This is one of the effects of the fact that the huge (eventually multi-trillion yuan) Chinese government effort to stabilize the property sector will not stimulate new construction. With all the implication for commodities that understanding entails.
From Reuters via The Asahi Shimbun, December 12:
Waning trust: China shadow banks pivot away from property to survive
For more than a decade, Chinese developers’ debt-fueled construction boom enriched the country’s shadow banks, who were eager to capitalize on the needs of an industry desperate for credit and too risky for traditional lenders.
Now, in the wake of a government clampdown on real estate firms’ debt binge, that credit demand has collapsed--and so too has the single biggest revenue stream for shadow banks, also known as trust firms.
China’s shadow banking industry--worth about $3 trillion, roughly the size of Britain’s economy--is scrambling for new business, including direct investment in companies, family offices and asset management.
It is also shrinking, with once-well-paid employees leaving for other jobs after scavenging for new deals. The industry’s plight is a sharp contrast to China’s main street financial firms, which the crisis has not yet seriously affected.
“Everyone was eating a mouthful of rice, surviving another day,” said Jason Hao, who left his job this year at a Shanghai trust firm after his pay plunged from as much as 4 million yuan ($570,000) a year to about 240,000 yuan ($34,000).
He is now working at an asset management company....
....MUCH MORE
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