In a message to investors last week, an employee of Datang Wealth Management, a company controlled by Zhongzhi that sells Zhongrong products, perpetuated the idea that the government would not abandon them.
“Our trust contracts are all true and valid,” the employee wrote in a message shared with The New York Times. “And it is a leading trust company with a central-government-owned enterprise background, so our payment problem will definitely be solved, and the result will not disappoint.”
Zhongrong’s biggest investor is Jingwei Textile Machinery, a state-owned enterprise, while Datang shares the name of its minority shareholder, Datang International Power Generation, a state-owned utility. Last month, Jingwei announced that it was pulling its shares off the stock market, citing “significant uncertainties” without mentioning Zhongrong.
The accountant in northeast China said she had invested $1.5 million into two Zhongrong trust products. While she knew little about Zhongrong, she felt safe because its largest shareholder is a state-owned firm and it had a license from China’s banking regulator. She said she had received a commitment letter promising to make up any shortfall in her investment.
But when her $550,000 investment into one of the funds matured last month, she did not receive her principal or her 7.6 percent interest after a year. She said the company would not reassure her that she would be paid. After she visited a local financial regulator to lodge a complaint, a police officer warned her not to appeal to a higher authority. She asked to be identified only by her surname, Ms. Wang, for fear of further reprisals.
