About half of outstanding trust assets were with industrial and commercial companies and infrastructure projects, while 11 percent were in the real estate sector, according to the association. As property risks increase, trusts may become more cautious in directing money to that industry, the association said.

The association's report showed that the 68 trust firms have net assets of only 275 billion yuan, suggesting a limited ability to shoulder any implicit guarantees for their products.

At least 15 trust products have been reported to have repayment difficulties this year, according to UBS AG, citing media accounts and company disclosures.

At the same time, local governments are working to avoid defaults, brokering deals between corporates and banks and leaning on lenders to provide bridge loans or take over shadow credit, Wang Tao, chief China economist at UBS, wrote in a July 10 note.

In addition, increased bank lending - local-currency loans in June were the highest for that month since 2009 - new forms of shadow financing and looser liquidity have helped prevent "high-profile shadow credit events", Wang said.

Investors' concerns may revive next year as local governments' finances deteriorate and the effects of a property-market downturn continue, she said.

The outstanding value of wealth-management products sold by banks surged by 3.8 trillion yuan in the first five months of this year to 14 trillion yuan, according to the banking regulator.

The average return on such quasi-savings products was about 4.13 percent in 2013.

Securities companies' asset-management businesses have been bulking up, reportedly taking over some underlying assets from trust products, according to UBS.

The value of assets managed by brokerages surged 43 times in the last two years to 5.2 trillion yuan, compared with a twofold increase for trusts and a 41 percent gain for mutual funds, a May report by Securities Association of China shows.

The rapid expansion in assets managed by brokerages is largely being driven by their repackaging of loans into wealth-management products, the primary business of trusts, according to consulting firm Z-Ben Advisors Ltd.

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