Chinese authorities have opened a probe into Zhongzhi, one of the biggest conglomerates in the country’s sprawling shadow financing market, days after the group declared that it was “severely insolvent”.
Beijing police said that Zhongzhi was suspected of committing “illegal crimes”, and that “mandatory criminal measures” have been placed on a number of suspects, including one surnamed Xie, the same as its late founder. The statement did not specify the suspects’ alleged crimes or details of the measures being taken.
Zhongzhi had disclosed in a letter to investors last week seen by the Financial Times that it was facing a shortfall of about $36.4bn, renewing concerns over China’s $2.9tn opaque shadow financing sector and its exposure to the troubled property sector and wider economic slowdown.