China orders audit of $3 trillion trust industry

China’s top auditor is examining the $3 trillion fiduciary industry.

The Chinese trust industry is an important part of the country’s shadow banking system. It provides a way to channel deposits into risky investments through products that are often designed to circumvent capital or investment regulations.

The report said China’s National Audit Bureau last month reviewed the books of at least 20 trust companies to assess the risks they pose to financial security.

Companies are encouraged to report high-risk loans to developers and plans to eliminate them.

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