Police in eastern China’s Zhejiang province have detained Yu Faxiang, the chairman of Hong Kong-listed Haichang Ocean Park, as authorities investigate alleged mismanagement following defaults on multibillion-yuan wealth products issued by a firm under his control.

It is the latest crackdown on mainland China’s shadow banking system, continuing years of government efforts to clean up the sector.

Police have imposed “criminal compulsory measures” against Yu and were conducting a probe into his alleged wrongdoings, Haichang, mainland China’s largest marine theme park operator, said in an exchange filing on Tuesday, adding that it had been notified by Yu’s family about the matter.

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The development comes just six months after Sunriver Holding Group, which is controlled by the billionaire, spent HK$2.3 billion (US$295.7 million) to buy a 39 per cent stake in Haichang.

Yu Faxiang, the chairman of Hong Kong-listed Haichang Ocean Park, has been arrested on the mainland. Photo: Xinhua alt=Yu Faxiang, the chairman of Hong Kong-listed Haichang Ocean Park, has been arrested on the mainland. Photo: Xinhua>

Sunriver Holding also has two Shanghai-listed subsidiaries – Sunriver Culture Tourism and Anhui Gourgen Traffic Construction. Both companies released statements confirming Yu’s detention.

Earlier this month, a redemption crisis affected thousands of investors who bought wealth management products linked to a real estate project operated by Sunriver Holding.

On December 7, the three listed firms said in exchange filings that there had been delays in the repayment of the wealth management products, and said Yu would bear the related liabilities.

Shares of Haichang, which owns Shanghai Haichang Ocean Park, slumped 6.3 per cent to HK$0.45 on Tuesday morning. Sunriver Culture shed 2.8 per cent to 5.91 yuan and Gourgen Traffic lost 4.6 per cent to 7.60 yuan.

Wealth management products, a big part of China’s shadow banking system, are targeted at depositors with an appetite for low risks, with the funds from these products typically invested in fixed-income and money market instruments.

A large portion of the products was sold via peer-to-peer (P2P) lending platforms on the mainland.

Data from Zhejin Asset Operation, a P2P platform, showed about 10 billion yuan of borrowings by Sunriver Holding had matured this month.

“A troubled property industry is still the cause for the repayment scandals,” said Wang Feng, chairman of Ye Lang Capital, a Shanghai-based financial services group. “Yu’s case will see banking regulators swing into action again to minimise risks in other wealth management products.”

Borrowing via P2P trading systems mushroomed on the mainland from 2012 when Beijing encouraged the operators to help cash-hungry small businesses access much-needed loans. But the sector spiralled out of control as thousands of platforms were found to be illegally running businesses that put depositors’ money at risk.

In 2016, Beijing started a crackdown on shadow banks in line with a nationwide clean-up of P2P lending platforms.

As of 2020, defunct P2P platforms owed depositors 800 billion yuan after four years of crackdown, according to the mainland’s banking and insurance regulator.

Yu Xiangrong, Citigroup’s chief economist for Greater China, said last month that stronger stimulus measures were needed to halt the decline in China’s embattled property sector, which had not only dragged down economic growth but also deterred consumers from freely spending on goods such as clothing and home appliances.

The property sector and related industries, such as home appliances and construction materials, account for about a quarter of the country’s economic output.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2025 South China Morning Post Publishers Ltd. All rights reserved.

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