World
Elderly retirees face big losses after Chinese trust goes bust, reflecting turbulent economy
CHENGDU, China (AP) — Some investors in a troubled trust fund in China are facing financial ruin under a government plan to return a fraction of their money, casualties of a slump in the property industry and a broader economic slowdown.
Sichuan Trust, headquartered in the southwest city of Chengdu, announced it was insolvent in 2020, stricken by sketchy accounting and failed investments in shopping malls and other projects. A deadline earlier this month to accept a 20%-60% “haircut” or loss on their investments has left some investors in deep financial trouble, according to public announcements and AP interviews with five people affected.
China’s economy, the world’s second largest, depends heavily on real estate development to drive growth and create jobs. Property prices and sales have languished after a crackdown on what leaders viewed as dangerous levels of borrowing, causing dozens of developers to default on their debts.
At the National People’s Congress session in Beijing last week, officials pledged to do more to protect investors. Premier Li Qiang said China would work to control risks and resolve the property crisis.
For the people who put their life savings into Sichuan Trust and similar entities, it’s likely too late. Around 300 of more than 8,000 investors refused to accept a government plan and are looking for legal help, a relative of one investor said. A few who attempted to come to Beijing during the congress to air their grievances were blocked by police, the relative said.
The ruling Communist Party faces a dilemma: Debt is a problem, but falling home prices lead people to scrimp on spending. That squeezes companies’ sales, so they lay off workers and cut back on investment. The result: slowing growth and less wealth to go around.
Inevitably, someone will end up losing out as China’s debt crisis unwinds, said Tsinghua University finance professor Michael Pettis.
“Nobody wants to absorb the loss. If you assign it to households, you weaken consumption even more,” Pettis said. “It’s got to be assigned. And that’s the political problem.”
Trusts are a cross between a bank and an investment fund. Some advertised their offerings as reliable, high interest government-backed accounts. They’re actually private entities that fund projects like factories and shopping malls. Weak disclosure requirements allowed them to use money from new investors to pay what they owed earlier ones, a set-up somewhat like a Ponzi scheme.
“Financial supervision was relatively loose in the past, so the design of these products, including systems for protecting investors’ rights and interests, had serious issues,” said Zhu Zhenxin, chief analyst at Rushi Finance Institute in Beijing. “If underlying assets of financial products won’t generate enough returns to pay such high interest rates, default is inevitable.”
The troubles at Sichuan Trust first surfaced when the government began restricting new sales of trust products in 2020. Without revenue from new investors, it couldn’t pay its outstanding debts.
That summer, Sichuan Trust announced it had 25.3 billion RMB ($3.5 billion at the time) in debts it couldn’t repay. The provincial government and banking regulators took control, ousting the management, reorganizing its books and launching an investigation.
Hundreds of investors staged weekly protests outside the company’s headquarters and their losses became a political issue.
In 2021, police detained Sichuan Trust’s majority shareholder Liu Canglong, a mining and real estate tycoon who was once the richest man in Sichuan, a province of more than 80 million people. He is accused of embezzling trust funds.
In December, the trust announced it would return investors’ funds according to a sliding scale of the original investment. The larger the investment stake, the larger the loss.
That sparked more protests.
“We’re extremely anxious,” one investor who asked not to be named told The AP. “It’s so cruel, the amount of money they’re giving us is so little.”
A person answering Sichuan Trust’s hotline said the company does not take interviews and would not provide comment. Sichuan Trust, the Sichuan provincial government and the China Banking and Insurance Regulatory Commission did not respond to faxed and emailed requests for comment.
The plan to return funds “appropriately favors small and medium-sized investors,” Sichuan Trust said earlier in a public statement, calling it “fair.”
Those protesting fear say they’ve been harassed and intimidated, subjected to police interrogations and threats from their children’s employers. They’ve been barred from leaving Chengdu or, at times, their housing compounds.
On a recent visit to the company’s headquarters, dozens of uniformed officers, half a dozen police vehicles and an empty bus were parked outside. More than a dozen plainclothes agents who refused to identify themselves followed two AP journalists around.
Earlier, a Dutch journalist was shoved to the ground and forced into a police vehicle when he attempted to approach protesting investors.
“They abduct you, they threaten your children,” said another investor, who also did not want to be identified due to fears of more police harassment. “They have so many dirty tricks.”
Analysts say investors were bound to suffer big losses given the size of Sichuan Trust’s debts. Chinese media have reported on the problem, but focused on alleged wrongdoing by those who ran the trust, presenting the repayment plan as a fair solution.
Some of the more than 95% of investors who signed off on the plan said they agreed under duress and were threatened with bigger losses if they didn’t meet a March 5 deadline.
Trusts have a high minimum investment — for Sichuan Trust it was generally 300,000 yuan ($42,000) — and many people believed mostly the relatively well-off were affected.
However, some investors were retirees who said they met the investment threshhold by collecting money from friends and relatives who now want their money back. For them, Sichuan Trust’s default is a calamity.
“They’re so poor, they don’t have money to spend,” said a relative of investors who lost money to the trust. “They don’t have money for medical treatment. They have to borrow money to survive.”
Those interviewed said the name Sichuan Trust led them to believe it was a trustworthy financial institution like a bank, with a steady, fixed interest rates, rather than a risky investment fund. They were attracted by the 8% or 9% interest rates it promised – multiple times higher than traditional savings accounts. Some financially unsophisticated retirees invested large chunks of their life savings.
“The country said trusts are very safe, like banks,” one of the people said. “We didn’t think there would be problems.”
Instead of enjoying their retirements, two of the people said, they’ve had to borrow money from relatives and cut back on their expenses.
“We ordinary people are miserable,” another investor said. “The corruption is so serious.”
China’s roughly $3 trillion trust sector is part of a large “shadow banking” industry in the country, which for decades supplied credit to entrepreneurs and households not served by the state-run banking system. Concerned over speculation and illegal practices, authorities have tightened controls. In 2020, regulators declared victory in cleaning up China’s online peer-to-peer lending industry, or P2P.
Wealth management companies also have gotten into trouble.
“We believe risks could increase, potentially affecting more financial-sector entities, if China’s economic recovery continues to lose momentum and the property sector’s distress is sustained,” Fitch Ratings said in a report after the collapse of another big trust company, Zhengrong.
Officials and analysts say crackdowns have been necessary, but investors footing the bill are questioning how they’ve been carried out.
“I support the Communist Party very much,” one of the investors said. “But some people are blackening the Party’s name.”
___
AP Business Writer Elaine Kurtenbach contributed to this story.
Gaza’s Health Ministry said on Wednesday that at least one Palestinian was killed and 48 were wounded when gunshots were fired on a crowd that overran a new aid distribution site in the war-battered enclave that was set up by an Israeli and U.S.-backed foundation.
Chaos erupted as crowds of Palestinians broke through the fences around the distribution site on Tuesday. It was not immediately clear who opened fire, Israeli forces, private contractors or others.
Israel has vowed to seize control of Gaza and fight until Hamas is destroyed or disarmed and exiled, and until the militant group returns the remaining 58 hostages seized in the Oct. 7, 2023, attack that sparked the war.
Hamas-led militants killed some 1,200 people, mostly civilians, and abducted 251 people in the 2023 attack. Israel’s retaliatory offensive has killed around 54,000 Palestinians, according to the Gaza Health Ministry, which does not distinguish between civilians and combatants in its count.
Here’s the latest:
Israel hits the airport in Yemen’s capital held by Iran-backed rebels
Israeli Defense Minister Israel Katz said Wednesday’s strikes destroyed the last plane used by the Houthi rebels, while the rebel-run al-Masirah TV said they had targeted a plane from the country’s flagship carrier Yemenia.
The strikes came after Iran-backed Houthi rebels fired several missiles at Israel in recent days, without causing casualties.
The Houthis have targeted Israel throughout the war in Gaza in solidarity with Palestinians. The Houthi missiles have mostly been intercepted, although some have penetrated Israel’s missile defense systems, causing casualties and damage.
Israel last struck the airport in Sanaa on May 6, destroying the airport’s terminal and leaving its runway riddled with craters. Some flights resumed to Sanaa on May 17.
A controversial new aid distribution system
The distribution hub outside Gaza’s southernmost city of Rafah were chaos erupted on Tuesday was opened by the Gaza Humanitarian Foundation.
The foundation is taking over the handling of desperately needed aid under a new, U.S. and Israeli-backed system despite concerns raised about the group from the United Nations and the recent resignation of its executive director.
The U.N. and other humanitarian organizations have rejected the new system, saying it won’t be able to meet the needs of Gaza’s 2.3 million people and allows Israel to use food as a weapon to control the population. They have also warned of the risk of friction between Israeli troops and people seeking supplies.
Spokesman says the UN has nothing to do with the new aid system
Stephane Dujarric says the United Nations has not nothing to do with the Gaza Humanitarian Foundation’s aid distribution because its plan does not comply with U,N. humanitarian principles of neutrality, independence and impartiality in delivering aid — which apply from Gaza to Sudan to Myanmar and dozens of other countries.
Dujarric said on Tuesday that it is “an arduous process” to coordinate with Israeli authorities to get U.N. trucks to the loading area to pick up aid, and to determine if roads for the trucks to traverse are safe.
“We’re still trying — desperately trying — to deliver aid based on our system that has worked … and it’s very challenging,” he said
World
Trump claims Canada 'considering' offer of free Golden Dome in exchange for becoming 51st state
U.S. President Donald Trump purported on Tuesday that Canada was “considering” giving up its statehood in exchange for protection by the proposed “Golden Dome” missile defense system at no cost, despite Canadian officials repeatedly stating that the country is not for sale.
“I told Canada, which very much wants to be part of our fabulous Golden Dome System, that it will cost $61 Billion Dollars if they remain a separate, but unequal, Nation, but will cost ZERO DOLLARS if they become our cherished 51st State,” Trump wrote on Truth Social.
“They are considering the offer!” he claimed.
Trump has threatened in recent months to annex Canada, an idea fiercely rebuked by Canadian officials and their citizens.
KING CHARLES II VISITS CANADA AS SHOW OF SUPPORT FOR COUNTRY COVETED BY TRUMP
U.S. President Donald Trump meets with Canadian Prime Minister Mark Carney in the Oval Office of the White House in Washington, D.C., on May 6, 2025. (Jim WATSON / AFP)
Canada’s Prime Minister Mark Carney, who secured an election win last month in part due to Canadians’ opposition to Trump’s wish to make the country part of the U.S., told Trump earlier this month that his country “won’t be for sale, ever.”
King Charles III, who is recognized as Canada’s sovereign, gave a speech before the Canadian Parliament on Tuesday in which he appeared to reject Trump’s idea of purchasing the North American country and making it the 51st U.S. state.
“Canadians can give themselves far more than any foreign power on any continent can ever take away,” he said. “And that, by staying true to Canadian values, Canada can build new alliances and a new economy that serves all Canadians.”
Canadian Prime Minister Mark Carney is greeted by U.S. President Donald Trump as he arrives at the West Wing of the White House, Tuesday, May 6, 2025, in Washington, D.C. (AP Photo/Mark Schiefelbein)
As for the “Golden Dome,” Trump announced last week that the U.S. had officially selected the architecture for the missile defense system that would create a network of satellites to detect, track and potentially intercept incoming ballistic missiles.
The U.S. president said the project would cost $175 billion to build and that it was expected to be “fully operational” within three years. He also said Canada would be included in its safety net.
“Canada has called us, and they want to be a part of it. So we’ll be talking to them; they want to have protection also,” Trump said at the time.
CARNEY SAYS CANADA IS NOT FOR SALE, TRUMP REPLIES, ‘NEVER SAY NEVER’
U.S. President Donald Trump meets Canadian Prime Minister Mark Carney in the Oval Office of the White House, Tuesday, May 6, 2025, in Washington, D.C. (AP Photo/Evan Vucci)
Carney’s office said last week that there were “active discussions” between the U.S. and Canada on current and new security programs, including the “Golden Dome.”
“Canadians gave the prime minister a strong mandate to negotiate a comprehensive new security and economic relationship with the United States,” a spokesperson for Carney told BBC News.
“To that end, the prime minister and his ministers are having wide-ranging and constructive discussions with their American counterparts. These discussions naturally include strengthening [North American Aerospace Defense Command] and related initiatives such as the Golden Dome,” the spokesperson continued.
& Estelle Nilsson-Julien
Published on
A document going around online alleges that the Israeli Ministry of Foreign Affairs plans to take back control of the Tombs of the Kings, a sacred site which is under French control in East Jerusalem.
It’s been circulating on social media and presents a decision allegedly made by Gideon Sa’ar, Israel’s Foreign Affairs Minister.
It suggests that Israel’s Foreign Ministry is looking into holding “diplomatic negotiations with the French government,” in a bid to transfer the holy site to Israel.
At the top of the document, “Jerusalem Day” is mentioned, an Israeli national holiday which marks the moment when Israeli forces took over East Jerusalem, following the 1967 six-day war.
Jerusalem Day falls yearly in May or June, in line with the Hebrew calendar’s month of Iyar.
However, EuroVerify found no proof that the document is real.
In a public statement shared on X, Israel’s French embassy refuted the allegations and said it deplores such “fake news.”
“We urge everyone to be vigilant when it comes to unsourced information on social networks,” it added.
When approached by EuroVerify, France’s Ministry of Foreign Affairs said: “We are not aware of any official Israeli approach to this effect. The national domains are the property of the French State.”
“This ownership is recognised by both Israel and the Palestinian Authority through international agreements,” it continued. “In Jerusalem, France has owned, since the 19th century, four national domains and religious Christian and Jewish sites, whose ownership was recognised by the State of Israel in 1948.”
Why does France control certain sites in Jerusalem?
In addition to various Christian and Jewish religious sites in the region, France owns four heritage sites in Jerusalem, under a treaty known as the Fischer-Chauvel agreement.
These sites, including the Tombs of the Kings, are known as the French National Domain in the Holy Land, with some of France’s claims over them dating back to the Ottoman era.
The other three are the Church of the Pater Noster (also known as the Sanctuary of the Eleona), the Benedictine monastery in Abu Ghosh and the Church of Saint Anne.
The Tombs of the Kings are believed to be the burial site of Queen Helene of Adiabene, who converted to Judaism around 30 AD and died sometime between 50 and 56 AD. They were originally thought to be the burial place of the kings of Judah.
The French claims are based on the government’s purchase of the site from a private owner in 1886. Jerusalem was part of the Ottoman Empire at the time and the Ottoman government officially recognised the sale as legal under its law.
France continued to assert its ownership of the Tombs of the Kings and other sites during the British Mandate and later under Israeli rule.
It and the newly-founded State of Israel drew up the Fischer-Chauvel agreement between 1948 and 1949 to formalise Paris’ claim to the sites. However, while Israel acknowledges the existence of the agreement, it has never officially ratified it.
Nevertheless, it has generally respected the privileges associated with the sites and given de facto recognition to French control. The tricolour flag flies over them, and they are administered by French authorities, but they conform to Israeli property law.
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