In a move signalling further wobbles in its so-called shadow banking sector, a Chinese trust firm has reportedly warned that one of its high-yield investment products may have trouble making payments on time.

In a move signalling further wobbles in its so-called shadow banking sector, a Chinese trust firm has reportedly warned that one of its high-yield investment products may have trouble making payments on time.

China Credit Trust Co Ltd's "Credit Equals Gold #2" wealth management product, which raised RMB1.3 billion ($209.62 million) from investors in 2011, may face difficulties repaying them when the product matures on 25 July, Reuters reported, citing an item issued by the state-owned China Securities Journal. The latter publication quoted a statement by the company to investors.

The story is likely to stoke fears that investors, lured by the promise of more attractive returns than those afforded by conventional bank products, are running undue risks. China’s banking regime, being notoriously opaque, is considered a potential weak point for the world’s second largest economy.
 
The report said the "Credit Equals Gold #2" product is encountering financial problems because a coal miner in northern Shanxi province has not been making fee payments since the second quarter of last year. Reuters said an official at China Credit Trust declined to comment when contacted, and the statement cited by the China Securities Journal was not publicly available.

This isn’t the first time that a product lending money to coal firms has had difficulties. Earlier in 2014, China Credit Trust warned about a possible default on a similar product - "Credit Equals Gold #1". Investors were saved by an investor that bought collateral assets.