China's Zhongzhi: Insolvency and Massive Liabilities Plague Troubled Shadow Bank

Zhongzhi Enterprise Group, a major wealth manager in China, has informed investors that it is heavily insolvent with liabilities of up to $64 billion, raising concerns about the spillover of the country's property debt crisis into the broader financial sector. The firm, which has significant exposure to China's real estate sector, apologized to investors in a letter, stating that its liabilities far exceed its estimated total assets. Zhongzhi's troubles are expected to reignite worries about contagion, although regulators are anticipated to intervene to prevent a wider fallout. The company's financial difficulties highlight the risks associated with China's highly indebted property sector and its shadow banking system.