China’s shadow banks scramble for new business as property credit collapses: report

One shadow banking employee saw his yearly pay plunge from $500,000 to $34,000.

Chinese shadow banks’ are seeing their single biggest revenue stream dry up in the wake of a collapse in capital demand from property developers amidst a government clampdown, reports Reuters.

Data from industry-tracking website Yanglee.com shows that only 1,483 real estate-related trust products were sold in 2022 through the end of September. This is 69.7% lower from  the 4,891 sold in the first nine months of 2021.

The value of the 2022 deals also plummeted 77.9%, at only CNY117.2b during the same period. In comparison, the value of deals from January to September 2021 was CNY531.3b. 

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Real estate products accounted for 8.7% of all trust products in September, compared with about 30% in the same month the last two years, Reuters found.

As a result, China's shadow banking industry - worth about $3t, roughly the size of Britain's economy - is scrambling for new business, including direct investment in companies, family offices and asset management.

Once-well-paid employees are now leaving for other jobs after scavenging for new deals. One former shadow banking employee reportedly saw his pay plunge from $570,000 a year to just $34,000.

Read more from Reuters.