As China’s economy continues to slowdown, economists believe there will be a higher risk of trust products defaulting.
The high profile case involving one of China’s largest state owned enterprises, the Industrial and Commercial Bank of China (ICBC), renewed the spotlight on a type of lending that has grown so quickly it is worrying China's State Council and the International Monetary Fund (IMF).
This type of non-traditional lending is also called 'shadow banking' and it has emerged to fill a void in the Chinese financial system, both from the borrower's and the investor's point of view.
Chinese investors put money into trusts and wealth management products because of a lack of investment avenues in the country.
The money pooled from the sale of these trust products is used to fund local government projects and industries such as mining.
The product marketed by ICBC was used by a trust firm to fund a coal company that has since collapsed.
At first, ICBC said it was likely the bank wouldn’t be able to pay back investors, but in the end there was a mysterious rescue.
Economists like Feng Pengcheng from the University of International Business and Economics are disappointed about this last minute save because he feels it was a missed opportunity to teach investors a valuable lesson in financial education.
"These are people with millions, tens of millions of dollars in savings," Dr Feng said.
"They can afford to lose in the event of a default."
The case also highlighted a long-standing belief among investors that someone will always bail them out.
For Xu Sitao from the Economist Group, the outcome flew in the face of official promises to reform the financial sector by allowing market forces to play a bigger role.
"Reform is about taking short term pain and you can’t have reform without taking pain," Mr Xu said.
So just how big is the shadow banking sector?
No one knows how big the shadow banking sector is, although some estimates vary between 10 to 30 trillion Renminbi.
What people agree on is its rapid expansion and the speed of that rise has caught the eye of the IMF because it is worried regulations cannot keep up.
The organisation, however, does not believe investments from shadow banking alone will cause a systemic crisis.
"We are not there – neither in size, nor in any sort of loss of control of the overall system," the IMF's mission chief in China, Markus Rodlauer, said during a conference call last July.
The guidelines around shadow banking were recently issued by China’s State Council in an attempt to contain the risks.
But the implementation will be at the hands of regulatory agencies, which is an area Feng Pengcheng has some reservations about.
"The way these are carried out will affect the level of risk but we know that in China, many documents are issued but not fully implemented," Dr Feng said.