Elderly retirees face big losses after Chinese trust goes bust, reflecting turbulent economy

CHENGDU, China (AP) — Some investors in a troubled trust fund in China are facing financial ruin under a government plan to return a fraction of their money, casualties of a slump in the property industry and a broader economic slowdown.

Sichuan Trust, headquartered in the southwest city of Chengdu, announced it was insolvent in 2020, stricken by sketchy accounting and failed investments in shopping malls and other projects. A deadline earlier this month to accept a 20%-60% “haircut” or loss on their investments has left some investors in deep financial trouble, according to public announcements and AP interviews with five people affected.

China’s economy, the world’s second largest, depends heavily on real estate development to drive growth and create jobs. Property prices and sales have languished after a crackdown on what leaders viewed as dangerous levels of borrowing, causing dozens of developers to default on their debts.

At the National People’s Congress session in Beijing last week, officials pledged to do more to protect investors. Premier Li Qiang said China would work to control risks and resolve the property crisis.

For the people who put their life savings into Sichuan Trust and similar entities, it’s likely too late. Around 300 of more than 8,000 investors refused to accept a government plan and are looking for legal help, a relative of one investor said. A few who attempted to come to Beijing during the congress to air their grievances were blocked by police, the relative said.

The ruling Communist Party faces a dilemma: Debt is a problem, but falling home prices lead people to scrimp on spending. That squeezes companies’ sales, so they lay off workers and cut back on investment. The result: slowing growth