Crisis in China's 'shadow banking' sector leads to defaults

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A growing crisis in China's "shadow banking" sector is threatening further damage to an economy reeling from multiple problems, even as a new report questions the ability of the government in Beijing to come to the rescue via fiscal stimulus.

On Wednesday, Bloomberg News reported that Chinese authorities have enlisted the Citic Trust Co., a subsidiary of the state-owned China Construction Bank, to assess the state of Zhongrong International Trust Co. When Citic was asked to make a similar assessment of a large asset manager in 2021, it was the prelude to a massive bailout package meant to prevent the firm's collapse.