SHANGHAI/BEIJING/ HONG KONG, (Reuters) – In March 2013, retired chemical company employee Anne Xing, her older sister and their husbands visited a China Everbright Bank branch on the outskirts of Shanghai. A private wealth manager at the bank had a special deal to offer them.
“He said there is a high-quality product,” Xing recalls. “Only elite customers can buy it. We asked him if there was any risk. He said there was no risk.”
The two couples sank about 5 million yuan (about $762,000) into the investment product, which offered 9.5 percent annual interest over two years – substantially higher than the 3.75 percent they could earn on a fixed, two-year deposit at the same bank. Xing’s sister said she sold a property for 3 million yuan to fund her investment. The two families say they didn’t know exactly where the money was going at the time. When the contracts arrived weeks later, it turned out they had entered China’s $9.8 trillion shadow banking industry.
