When a company collapses, jilted Chinese investors often blame government inaction or lack of regulation for their losses. The poorly regulated financial sector is also prone to scams. This has fueled frenzied speculation in real estate, the stock market, and on exchanges for commodities such as rare metals.
China keeps interest rates very low to encourage investment in major real estate and construction projects, pushing the burgeoning middle class to look beyond banks to seek out better rates for their accumulating wealth. Some industry analysts have deemed it a Ponzi scheme.įanya’s meteoric rise and subsequent collapse reflects systemic problems within China’s finance sector. Its founder was arrested in December 2015, and the company is currently under investigation. Within three years, it had become the world's largest trading platform of its kind. But by July 2015, Fanya had frozen more than $6.5 billion in assets after a liquidity crisis, devastating many of its 220,000 investors. The trading platform, founded in 2011 and based in Kunming in the southwestern Chinese province of Yunnan, allowed investors to fund the buying and selling of rare metals such as bismuth and indium. Fanya Metal Exchange was once a celebrated success.
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