Trust firms give a boost to real economy fields

Amid the overcapacity cutting campaign and price swings, the steel sector might not be a good investment target at first glance, but some financial institutions are hoping to strike gold amid the market’s upgrading.

Via partnership with Zhaogang.com, a leading digital B2B platform in China that brings together steel producers and consumers, Bohai International Trust Co Ltd has launched a trust product that offers loans to steel purchasers to enable efficient deals on the platform.

Over 9,000 firms along the steel industrial chain have benefited from the trust product, which leverages Zhaogang.com’s matchmaking services to enhance the steel sector’s efficiency.

The trust firm has invested over 330 billion yuan (US$47 billion) in manufacturing, infrastructure, energy conservation, environmental protection, industrial upgrading and other real economy fields, according to the company’s president Ma Jianjun.

Like Bohai International Trust’s investment, China’s trust fund flows are shifting direction as the country keeps a tight rein on speculation and ups investment in the real economy.

China has stepped up regulation on irregular financial practices to forestall financial risks in recent years.

At the end of September, total entrusted assets balance of the country’s 68 trust firms stood at 22 trillion yuan, down by 2.39 percent quarter on quarter, data from the China Trustee Association showed.

The trust fund balance in the real-estate sector shrank by 148.07 billion yuan at the end of September compared with the end of June, the first quarter-on-quarter drop in over three years.

Industrial and commercial firms remained the biggest destination for trust funds flows. During the first three quarters in 2019, the sector saw new trust investment of 1.09 trillion yuan.