China's Rich Lose Faith and Fortunes as Investments Sour and Government Stands By

Well-to-do Chinese like Xue Li have lost millions in "landmine" investments like wealth management products and property. The government isn't bailing investors out this time.

About 50% of China's wealth is held by 8% of the population (113 million "got rich first" people). They own most publicly traded shares and funds.

These investors had benefited from decades of asset gains, especially in property. Now huge amounts of housing and stock wealth is being wiped out.

The wealthy are becoming more risk-averse, shifting money into deposits instead of stocks and property. This will reduce capital available for businesses.

Whereas the affluent used to support the government, they increasingly feel betrayed as the state lets them lose money. This erosion of goodwill has negative implications.