China Shadow Banking Scandal Draws Family Wealth Into Regulatory Spotlight

China shadow banking scandal concerns have escalated after police in Zhejiang detained Yu Faxiang, chairman and chief executive of Hong Kong-listed Haichang Ocean Park Holdings, as authorities probe alleged wrongdoing tied to delayed repayments on multibillion-yuan wealth management products issued by Sunriver Holding Group, a firm he controls.

Haichang said it was informed by Yu’s family that police had imposed criminal compulsory measures and opened an investigation, adding that operations remain normal.

The case follows a December redemption crisis involving wealth products linked to a Sunriver real estate project and comes about six months after Sunriver acquired a 39% stake in Haichang for HKD2.3bn (USD0.29bn).

The episode underscores rising regulatory scrutiny around China shadow banking scandal risks facing family-controlled businesses.