Plenty of Room to Grow: A Look at China's Business Trust Industry

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clpstaff &clp articles

Trusts in China have made considerable progress over the past few years. China's trust industry saw several positive developments in 2002, but much remains to be done to create an investment field with widespread appeal.

Until a couple of years ago, China did not have a single, coherent law that could govern one of the key components of a business arrangement: the trust. The PRC Trust Law (中华人民共和国信托法), promulgated and effective on April 28 and October 1 2001, respectively, established the legal status of a business trust in the PRC for the first time.1 According to a December 29 2001 Circular issued by the General Office of the State Council, a trust business shall be solely conducted by institutions approved by the People's Bank of China (PBOC) or the China Securities Regulatory Commission (CSRC), depending on the case. Due to the then confused state of China's trust industry, the State Council requested all trust and investment companies (TICs) to undergo a thorough reorganization and / or re-registration to develop the trust industry.

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