International Business
CEC Project, Focus: China
Timeframe: February 18th to April 7th

February 14th- China Shadow Banking: 6 Trusts Linked To Debt-Ridden Coal Company, Liansheng Group, Facing Default Risk
Shadow banking can be seen as institutions that are not under the same regulations as traditional banks, primarily because they do not accept traditional deposits. This allows for banks to work with and sell higher yield products that also carry varying degree of risk without undergoing the regulations put forth by a government. In China, this has been problem as over the years many of these firms in the shadow banking industry has had trouble repaying the debts they owed on the instruments they sold. One such firm, Jilin Trust, is about to default on the loan given to the Liansheng Group, which will be the fifth time the firm has defaulted on paying products that have matured. Five other trust firms also invested in the Liansheng coal mining Group, even though it has been in debt for a considerable amount of time. Jilin Trust has made news primarily from the fact that it has already failed to pay 763 million yuan in maturing high-yield investments it sold to China's second largest lender.
This is very problematic for China, as it can lower the faith investors have in the nation. If some of the largest trust firms have been unable to pay back investments they were selling, there is some sense of avoidance to not buy their products or further invest if there is no guarantee of a return at all. The main problem comes down to how the banks treat their customers though, as they often offer high-yield products with the assumed risk-free atmosphere, “However, banks are not legally required to shield investors from losses when products they help create and sell go bad” (Moran Zhang). This means that if one of these bonds or bills cannot be fulfilled, it is not up