In Depth: China’s Insurers Scale Back High-Yield Investment

China’s long-running real estate crisis and increasing risks in local government debt have forced the insurance industry to scale back a form of high-yield investment: non-bond debt issued by property developers or infrastructure builders.

The risks associated with such investments have shot up amid a wave of defaults by some of the country’s biggest developers and growing financial pressure on local government financing vehicles (LGFVs). Meanwhile, alternatives with the potential to generate similarly high returns are hard to find, posing challenges to insurers’ earnings.