Conjecture over the stability of China's banking system is bound to ramp up after the recent decision the Industrial and Commercial Bank of China, the country's largest bank, made to facilitate an exit for around 700 investors in a three billion-yuan trust product.Bloomberg summarised the background to the much talked about China Credit Trust Company, a Beijing-based firm that raised money through the Credit Equals Gold No. 1 trust in 2011 for a failed coal miner.The UK Financial Times explained that for a minimum commitment of three million renminbi investors were promised an annual return of 10 per cent for three years.China Credit Trust told the trust's investors that it had reached a pact for a partial redemption of the investment at par and asked them to contact financial advisers at ICBC for more details. Investors can sell their rights to unidentified buyers to recoup the principal. China Trust and ICBC didn't disclose the source of the funds.There will be some loss to investors, with interest foregone.The attention being paid by Western investment analysts and Western media to the expansion of China's shadow banking sector has escalated over the last couple of years.Forbes, for example, recounted the background to two trust defaults in 2012, one for a product distributed by Huaxia Bank Ltd and one sold by CITIC Trust. The FT reported that there were roughly four trillion renminbi (US$661 billion) in trusts maturing this year amid tight monetary conditions.Keith Pogson, assurance leader for banking and capital markets for Ernst & Young in Hong Kong, said of the controversy that a primary consideration was "social stability".Speaking before news of the bailout was widely known, Pogson said the "big four [state-owned banks] have distributed quite a lot of this stuff wealth management product, as have the next 17 in the system.""So it's a real test of the body politic as to whether to bail them out.Pogson said the risk for the banks was that a China Credit Trust rescue "would be a state guarantee for every product sold in this space."