Local financing networks are unravelling across China as the economic slowdown bites into one of the weakest but most enduring links in the financial system — pulling hundreds of thousands of investors down with it.
These networks flourished as long as sentiment was high and rapid economic growth persisted. Now, however, investors are taking to the streets across the country as they seek to recoup their losses. Money ploughed into financing schemes that went bust in 2014 amounted to more than Rmb100bn ($16bn).
Grassroots financing schemes operate in a similar manner to direct sales, with investors drawn in by the promise of high returns rather than, say, profits from selling cosmetics. Some are outright Ponzi schemes, while in others funds are funnelled into high-interest loans in the shadow banking sector or other unregulated investment projects.
Investors come from every rank in Chinese society. On Monday hundreds of well-heeled urban professionals who had purchased high-interest rate products from the Fanya Metal Exchange united with distribution agents who sold them in an unusual protest — which continued on Tuesday — in the financial heart of Beijing. Meanwhile in the neighbouring province of Hebei, farmers are trying to retrieve their life savings invested with a rural businessman who promised high returns from better-quality wheat.
Such “illegal fundraising” is spreading from the wealthier east coast to central and western regions, according to data from the China Banking Regulatory Commission. FT research shows every province in China recorded at least one financing scheme collapse in the past 18 months.
“We are teetering at the tipsy-topsy edge of a crisis, so regulators need to be putting out fires here, fires there,” says Anne Stevenson-Yang, founding partner of investment researcher J Capital Research.
The CBRC office that monitors illegal financing attributes the schemes’ proliferation to China’s economic slowdown and tighter credit along the financing chain. Cross-regional cases doubled in 2014 against the year before, while cases involving more than Rmb100m tripled and schemes involving more than 1,000 people quadrupled, it says.
“Many factors that can lead to an increase in illegal fundraising will not change fundamentally in the short term. We estimate that currently and in the future illegal fundraising will still occur frequently,” a CBRC report stated in May. “And in some regions, industries or areas, they will emerge violently.”
One of the largest cases reviewed by the FT involved an estimated Rmb8bn raised from 135,000 wheat farmers in three townships near the city of Xingtai, Hebei province.
The wheat farmers invested at least Rmb10,000 each — more than the region’s average annual household income — to buy into a “rural co-operative”. Members received discounts on fertiliser, rice and oils, subsidies for college students and the handicapped, and a gift of 100 packets of flour upon joining. The scheme’s collapse has devastated local families.
“There are people who left their children and wives to avoid creditors, and I even heard that one peasant committed suicide because he owes tens of million of renminbi,” says Hao Xiaochun, a 61-year-old farmer who borrowed Rmb200,000 to invest in the co-operative that he cannot pay back.
Pyramid schemes, multi-layered sales networks known as chuanxiao and other too-good-to-be-true investments have flourished for years in China, especially in rust belt regions such as the north-east. Chinese authorities ban direct sales and dole out harsh punishments to the organisers of failed schemes to ward off the kind of pyramid scheme collapses that convulsed Russia and Albania in the 1990s.
The best-known pyramid scheme in China was a $385m ant-farming business that embroiled 1m rural investors in the north-east before it collapsed in late 2007. Its founder was sentenced to death.
Around that time, lending restrictions in some sectors, chief among them property development, caused the informal or “shadow” lending business to boom, with interest rates well above the state-set rates in banks. Trust products, wealth management products and completely unregulated lending pools could offer higher interest rates by arbitraging the difference.
The posterchild for this new business was a young woman from Zhejiang province named Wu Ying, who was sentenced to death in 2009 on charges of illegally raising Rmb770m after a “cash flow problem” triggered her arrest. A coalition of businessmen and rights activists successfully campaigned to have her sentence commuted, citing the importance of private financiers to China’s private industry.
In the years since, the industry has proliferated. Several of the schemes that came to light in the past year were run by local government officials or their relatives, raising further worries about the ability of Chinese financial or judicial authorities to regulate shadow fundraising. In one case in the central city of Nanyang in Henan province, the founder was a policeman who killed himself after his scheme failed.
跟著經濟增加放緩，中國各地之處融資收集紛紜坍塌，致使數十萬名投資者遭遇喪失。處所融資收集是中國金融系統中最為軟弱、但也最為長期的關鍵之一。
只要投資者情感堅持樂觀，只要經濟連續快速增加，這些收集就會發達成長。但是，如今各地投資者紛紜走上陌頭，追求挽回本身的喪失。2014年湧現兌付危急的融資項目標資金總數跨越1000億元國民幣(合160億美元)。
民間融資項目以相似於直銷的方法運營，投資者被高額回報——而非(舉例而言)發賣化裝品——的利潤)所吸引。一些項目純潔是龐氏圈套，而在另外一些項目裏，資金被運送至影子銀行部分的高息貸款或其他不受羈系的投資項目。
投資者來自中國社會的各個階級。本周一，數百名穿著講究的都會專業人士在北京金融街舉辦了不平常的抗議，這些人購置了泛亞有色金屬生意業務所(Fanya Metal Exchange)的高息產物，發賣這些產物的署理商也參加了抗議者的行列。周二抗議仍在連續。與此同時，在圍繞北京的河北省，農人們正試圖拿回他們的終生蓄積，此前他們信任一名屯子販子對品德較高的小麥帶來高回報的許諾，紛紜入股該項目。
中國銀監會(CBRC)的數據表現，此類“不法集資”正從較充裕的東部沿海地域舒展至中西部地域。英國《金融時報》的研討註解，在曩昔18個月裏，中國每一個省分都湧現了最少一路集資項目坍塌的情形。
美奇金投資咨詢公司(J Capital Research)的開創合股人楊思安(Anne Stevenson-Yang)表現：“咱們正仿徨在危急的絕壁邊，羈系機構須要隨處滅火。”
賣力監測不法集資運動的中國銀監會辦公室將此類案件層見疊出歸因於中國經濟增加放和緩融資鏈條上信貸趨緊。該辦公室表現，2014年的跨省案例同比增加了1倍，同時涉案金額超億元的案件增加了兩倍，介入集資人數逾千的案件增加了3倍。
中國銀監會在本年5月宣布的申報中表現：“致使不法集資運動上升的很多身分不會在短時間內產生基本轉變。咱們估量，在當前及往後一段時代，不法集資運動仍會頻仍產生。在一些地域、行業和範疇乃至還大概表示得比擬劇烈。”
英國《金融時報》研討的最大案件之一是河北邢台鄰近3縣的13.5萬名栽種小麥的農人集資約80億元國民幣。
這些栽種小麥的農人每小我最少投資了1萬元國民幣——跨越該地域家庭均勻年收入——用於入股一家“屯子互助社”。該互助社的成員在購置化肥、大米和油料時享受扣頭，大門生和殘疾人獲得補助，入股時還能拿到100斤面粉作為禮物。該圈套的崩塌搗毀了本地許多家庭。
“有工資回避借主而分開了妻子孩子，我乃至據說有個農人由於欠了數萬萬元國民幣而自盡了，”61歲的農人郝小春(音譯)稱。他借了20萬國民幣投資這個互助社，現在無力了償。
多年來，金字塔圈套、被稱為“傳銷”的多層級發賣網、和其他好得不真正的投資產物在中國層見疊出，特殊是在東北如許的“鐵銹地帶”(指那些重產業曾非常蓬勃的老產業基地——譯者註)。中國政府制止直銷，並對失敗項目標構造者施以嚴格處分，以求防止湧現上世紀90年月震撼俄羅斯和阿爾巴尼亞的金字塔圈套崩塌風浪。
中國最有名的金字塔圈套觸及一家3.85億美元的螞蟻養殖企業。蟻力神在2007歲終倒閉前卷入了東北100萬屯子投資者。其開創人被判刑。
差未幾在誰人時刻，部門行業(個中主如果房地產開辟業)存在貸款限定，這致使非正式或“影子”貸款營業敏捷成長，其利率遠遠高於國度制訂的銀行貸款利率。信任產物、理產業品和完整不受羈系的貸款池，可以經由過程息差套利來供給更高的利率。
這一新營業的標記人物是浙江的年青女生——吳英。在因“現金流題目”被捕後，她被控不法集資7.7億元國民幣，並在2009年被判正法刑。由商界人士和人權活動聽士構成的一個同盟展開運動，以私家金融家對中公民營家當的主要性為由，勝利幫她得到了弛刑。
從當時開端，不法集資行業敏捷舒展。曩昔一年中暴光的部門圈套是由處所當局官員或是他們的支屬運作，這引發了人們對中國金融或法律機構羈系影子融資才能的進一步擔心。在一路產生在河南省南陽市的案件中，圈套的制作者是一位警員，他在圈套崩塌後自盡了。
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