"The economy has cooled down," said Deng Jugong, a senior trust industry executive who asked that his employer not be named. "Companies' demand for finance isn't very intense."
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Just a year ago, trust companies were riding a wave of growth. In 2010, as regulators tried to rein in the explosion in bank credit resulting from the country's 4 trillion yuan ($645 billion) economic stimulus plan, banks turned to trusts to help them comply with lending controls.
Trust companies bought loans from banks and packaged them into high-yielding wealth management products, which they marketed to bank clients as a higher yielding substitute for traditional savings deposits. Trust assets surged to 10.3 trillion yuan at the end of 2013, from just 2.9 trillion yuan in 2011.
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Now, however, the central bank has cut interest rates and is urging banks to lend more in a bid to temper an investment slowdown in real estate and manufacturing.
"We can't even push our own loans out the door," said a banker who packages wealth management products for a midsize Chinese lender in Shanghai. "Where are we going to find projects to make trust loans?"
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At the same time, trust companies are facing increased competition from upstart firms offering savers new forms of high-yielding investment products.
Ironically, trust companies — which were often accused of regulatory arbitrage for performing bank-like functions free from the regulatory limits on traditional banks — are warning about the risks of even more lightly regulated peer-to-peer lenders.
"As long as there's profit to be made, people will swarm towards it like wasps," said Mr Deng. "This P2P market looks very chaotic. But we trust companies have to get approval from the bank regulator."