Skip to main content
SpringerLink
Log in

Regulation-Driven Legal Doctrines of Investment Trusts in China

  • Article
  • Published:
European Business Organization Law Review Aims and scope Submit manuscript

Abstract

This paper explores the interaction between Chinese courts and regulators in dealing with promised return trusts, and shows that regulatory concern has been the main driver of the doctrinal modification over the past two decades. Until very recently, the investment trust sector was characterised by the offering of direct and indirect promised return trusts to investors. The most prominent feature of a promised return trust is that the beneficiary avoids the risks of both investment failure and the trustee’s insolvency. Chinese courts initially adopted a position of recognising the validity of both the trust and the promised return clause to facilitate governmental finance after the subprime mortgage crisis, yet later changed to one recognising the validity of the trust while negating direct promised return clauses only, as provided by the milestone Minutes issued by the Chinese Supreme Court in 2019. Both the pre-2019 and post-2019 attitudes of Chinese courts towards promised return trusts significantly deviate from two English trust law doctrines, namely, the mutual exclusivity of trust and debt, and beneficiaries being not personally liable to each other. The underlying reason why such divergence occurs is that the Chinese trust law doctrine in this regard has been reshaped in the interest of financial regulation in order to reduce systemic risk in shadow banking.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2

Similar content being viewed by others

Notes

  1. See the website of the China Trustee Association, http://www.xtxh.net/xtxh/statistics/46671.htm (accessed 12 February 2022).

  2. See the website of the Asset Management Association of China, https://www.amac.org.cn/researchstatistics/datastatistics/comprehensive/ (accessed 12 February 2022).

  3. One may also translate the first word as ‘guaranteeing return’ instead of ‘promised return’, see Hsu (2016). However, it is submitted that ‘promised’ is a more accurate word than ‘guaranteeing’, for using the latter may mislead readers into thinking of any real security involving property rights (i.e., security interests) or personal security involving third parties (i.e., suretyship), neither being necessary in regard to the present topic.

  4. Allen et al. (2020).

  5. The word ‘minimum’ in the description of the two typical scenarios means that promised return trusts are broadly fitted into the so-called ‘fixed-income investment’, a term often seen in financial studies. This is because in a fixed-income investment, as exemplified by fixed-income securities, the expected return is entirely fixed, whereas in a promised return trust, only the lowest return is fixed, while the highest return is variable, depending on how successful the money is invested.

  6. Acharya et al. (2021).

  7. According to Moody’s (2020), the shadow banking sector reached its peak size of 65.6 trillion RMB in 2017 and has been shrinking slowly since then.

  8. Article 5, item (5) of the Report, http://news.cnr.cn/native/gd/20171027/t20171027_524003098.shtml (accessed 12 February 2022).

  9. See Quanguo Fayuan Minshangshi Shenpan Gongzuo Huiyi Jiyao (Supreme Court Issuance No 254, 2019). Minutes are an official document issued by Chinese courts after an internal formal conference, containing a set of judge-made rules articulated in a detailed way to interpret relevant legislation. Minutes issued by the Chinese Supreme Court somewhat resemble a Judicial Interpretation, though the power to issue the former is not limited to the Supreme Court, but is also vested in lower courts. Supreme Court Minutes are generally regarded as less binding in judicial practice compared to a Judicial Interpretation.

  10. To clarify, for the purpose of this paper, the phrase ‘Chinese law’ refers to the following legal sources: (i) law (in its strict sense) promulgated by the National People’s Congress or its Standing Committee, (ii) authoritative interpretations and applications of law by the Supreme People’s Court (judicial interpretations, minutes, and judgments) and lower courts (judgments), and (iii) administrative regulations (i.e., regulatory rules) issued by the State Council and its ministry-rank units. The phrase ‘Chinese doctrine’ here refers to private law doctrine (i.e., doctrinal analysis based on the aforementioned (i) and (ii) sets of sources) as opposed to regulation.

  11. UCITS Directive 2009/65/EC, amended by Directive 2014/91/EU.

  12. AIFM Directive 2011/61/EU.

  13. Hsu (2016), Liu (2016) and Ho (2020).

  14. Shen (2016), Allen et al. (2019) and Liu (2019).

  15. Worthington (1996), ch. 3; Sin (1997), ch. 2; Swadling (2004), Preface; Heydon and Leeming (2016), ch. 2.

  16. See Sect. 3.2 of this paper.

  17. See Sects. 2.2, 4 and 5 of this paper.

  18. Lee (2009), Ho (2012), Reid (2012), Ho et al. (2013) and Wu (2014).

  19. See Sects. 3.1.2 and 5 of this paper.

  20. See Sects. 2.1.2 and 3.1.2 of this paper.

  21. Huang (2010).

  22. See Xu and Liu (2021) for discussions on the debt market and credit rating agencies in China.

  23. To name a few: Xintuo Gongsi Guanli Banfa (Measures for the Administration of Trust Companies) (promulgated on 23 January 2007); Xintuo Gongsi Jihe Zijin Xintuo Jihua Guanli Banfa (Measures for the Administration of Trust Companies’ Trust Plans of Assembled Funds) (revised on 4 February 2009); Xintuo Dengji Guanli Banfa (Measures for the Administration of Trust Registration) (promulgated on 25 August 2017).

  24. Dishisanjie Quanguo Renmin Daibiao Dahui Diyici Huiyi Guanyu Guowuyuan Jigou Gaige Fangan De Jueding (Decision of the First Session of the Thirteenth National People’s Congress on the State Council Institutional Reform Proposal) (Adopted at the First Session of the Thirteenth National People’s Congress on 17 March 2018), Art. 2(3), http://www.lawinfochina.com/display.aspx?lib=law&id=27728 (accessed 12 February 2022).

  25. A natural person is perfectly eligible to be a trustee in China: Trust Law 2001, Art. 24, para. 1.

  26. Jiang (2015).

  27. Commercial Bank Law (2015 Amendment), Arts. 3 and 43. The underlying reason is that China’s sectoral financial regulation delineates the investment scope of financial institutions based on their industries.

  28. Securities Investment Fund Law (2015 Amendment), Art. 5, para. 2.

  29. Ibid., Art. 5, para. 3.

  30. Ibid., Art. 6.

  31. Ibid., Art. 5, para. 4.

  32. Ibid., Art. 7.

  33. Kulms (2016), pp 1093–1094.

  34. Zhengjianhui Fabu Zhengquan Qihuo Jingying Jigou Simu Zichan Guanli Yewu Guanli Banfa Jiqi Peitao Guize (The CSRC Announced the Measures for the Administration of the Privately Offered Asset Management Business of Securities and Futures Business Institutions and Its Supplementary Rules), http://www.gov.cn/xinwen/2018-10/23/content_5333671.htm (accessed 12 February 2022).

  35. Securities Investment Fund Law (2015 Amendment), Arts. 50 and 87.

  36. Financial Stability Board (2011).

  37. Jiang (2015).

  38. Dang et al. (2019).

  39. Xu and Faure (2019).

  40. Hachem and Song (2021).

  41. Chen et al. (2020).

  42. The People’s Bank of China (PBoC) and CBRC jointly issued the Guiding Opinions on Further Strengthening the Adjustment of Credit Structures to Promote the Steady and Rapid Development of the National Economy, and encouraged local governments to establish LGFVs according to laws and regulations. Meanwhile, the Ministry of Finance also issued the Notice on Speeding up the Local Fund Raising for Matching Central Investment Projects to Expand Domestic Demand, and incentivised local governments to explore all sources of funding.

  43. Guo and Xia (2014).

  44. Allen and Gu (2020).

  45. Commercial Bank Law (2005 Amendment), Art. 39, para. 2.

  46. Hachem (2018).

  47. Bai et al. (2016).

  48. Chen et al. (2020).

  49. Zhongguo Yinjianhui Guanyu Guifan Yinxin Licai Hezuo Yewu Youguan Shixiang De Tongzhi (The CSRC’s Notice on Matters Related to Disciplining Bank-Trust Wealth Management Cooperation) (promulgated on 12 August 2010).

  50. Zhongguo Yinjianhui Guanyu Guifan Shangye Yinh Licai Yewu Touzi Yunzuo Youguan Wenti De Tongzhi (The CSRC’s Notice on Regulating the Investment and Operation of Wealth Management Business of Commercial Banks) (promulgated on 7 August 2014).

  51. Song et al. (2011).

  52. Tsai (2017).

  53. Li (2016).

  54. Ehlers et al. (2018).

  55. Allen et al. (2020).

  56. Liang (2016).

  57. Chinese Civil Code, Arts. 577 and 579.

  58. Enterprise Bankruptcy Law 2006, Arts. 109 and 113.

  59. Trust Law 2001, Art. 16.

  60. Ibid., Arts. 22, 32, 37 and 49.

  61. Ibid., Art. 34.

  62. Differently from, e.g., the London Stock Exchange, the daily price limits of 10 percent on regular stocks and 5 percent on special treatment stocks in the Chinese stock market make it possible for the trustee to enforce such a liquidation threshold, because it is virtually impossible for a Chinese stock to be suddenly worthless.

  63. See, e.g., Qian Haiying v New China Trust Co Ltd [2015] Chongqin No. 1 Intermediate People’s Court, YYZFMZZ No. 05003, https://mlaw.wkinfo.com.cn/judgment-documents/detail/MjAwODY1NTA0Nzk (accessed 12 February 2022); Xizang Huahong Caixin Venture Capital Co Ltd v Hunan Xianghui Asset Management Co Ltd [2016] Hunan High People’s Court, XMC No. 3, https://mlaw.wkinfo.com.cn/judgment-documents/detail/MjAwOTkxODY4MDg (accessed 12 February 2022); Du Xuan v Taoyun Capital Group Co Ltd [2018] Beijing No. 2 Intermediate People’s Court, J02MC No. 207, https://mlaw.wkinfo.com.cn/judgment-documents/detail/MjAyNTg1ODY2MDE (accessed 12 February 2022). In Qian Haiying, the claimant invested money in the defendant, who held the money on trust for the claimant and invested it in a rural development project company which needed debt finance. The defendant promised to pay back principal and estimated interest of 9% to 11% per annum in accordance with a formula. The development project did not go as well as expected, causing the defendant to be unable to collect enough trust fund from the project company to repay the claimant. The claimant therefore sued the defendant, claiming full payment. The claim was successful, one of the reasons being that the court recognised that there was a valid trust with a promised return clause. In Xizang Huahong, the claimant invested money in a trust company, which held the money on trust for the claimant and used it to help, by means of specific equity finance, another company applying for stock exchange listing, in which the defendants were stakeholders. The trust company promised to pay back principal and estimated interest of 15% to 16% per annum in accordance with a formula. The two defendants acted as sureties for the trust company’s aforementioned main undertakings. The investment went poorly, causing the trust company to be unable to make repayments. The claimant therefore sued the defendants for liability as sureties, which was successful. One of the key points of the court’s reasoning was that the enforcement of the ancillary suretyship depended on the validity of the main trust and the promised return clause in question, which were both recognised as valid by the court. In Du Xuan, the claimant invested money in a trust company for securities investment as a junior beneficiary. The trust company had arranged that the defendant was both the investment advisor and the one promising return for the claimant. When the investment went poorly, the claimant sued the defendant for performing its undertaking to repay principal and estimated interest of 12% per annum in accordance with a formula. The claimant succeeded, as the court recognised the validity of all the aforementioned agreements.

  64. See e.g., Tibet Trust Co Ltd v Huang Weiqiang [2016] Xizang High People’s Court, ZMC No. 9, https://mlaw.wkinfo.com.cn/judgment-documents/detail/MjAyMTk2Mzg4Mzk (accessed 12 February 2022); Chen Pingyuan v Tibet Trust Co Ltd [2017] Xizang High People’s Court, ZMZ No. 25, https://mlaw.wkinfo.com.cn/judgment-documents/detail/MjAyMTQ2NzI1OTk (accessed 12 February 2022); Hao Rusha v Wanxiang Trust Co Ltd [2017] Supreme People’s Court, ZGFMS No. 3865, https://mlaw.wkinfo.com.cn/judgment-documents/detail/MjAyMjUzOTYyNzQ (accessed 12 February 2022). The facts of the first two cases are essentially the same: an individual investor paid money to a trust company to carry out shadow margin lending, so that the trust company held the money collected from the individual investor as junior beneficiary and from some senior beneficiaries on a subordination trust, and created a stock trading account using this money. The junior beneficiary was authorised by the trust company to control the account in order to leverage his stock speculation, but was also liable to make good any loss of the senior beneficiary’s expected return of principal and interest of 8.5% or 12.5% per annum (depending on specific circumstances). The speculation was unsuccessful, causing a serious deficit in the trust fund. The trust company therefore sued the junior beneficiary on behalf of the senior beneficiary, asking the junior beneficiary to perform the duty to pay the aforementioned outstanding balance. The claim was successful, as the court recognised the validity of both the subordination trust and the indirect promised return clause in question. The facts in the Hao Rusha case can be said to constitute a variant of the first two, in that when the stock speculation failed, the individual investor sued the trust company (rather than the trust company suing the individual investor), claiming that the subordination trust was void by going against public policy, and that the trust company was liable to make restitution and compensation. The claim was unsuccessful, as the court, after a comprehensive response to the claimant’s arguments, held that the trust and the indirect promised return clause were perfectly valid even though they could facilitate shadow margin lending.

  65. Notably, while Article 34 of Trust Law 2001 provides that a trustee, without any breach of trust, is only liable to transfer the trust fund to the beneficiary to the extent of its remaining value, and is therefore not strictly liable to make good the diminution in value of the trust fund from the trustee’s own pocket, this merely equips the trustee with a shield which may be used as a defence against the beneficiary’s ‘promised return claim’. In other words, this provision by no means indicates that a trustee is forbidden to give the beneficiary a promised return undertaking as such, for the purpose of, e.g., making its trust product attractive to prospective investors.

  66. Re London Wine Co (Shippers) [1986] PCC 121; Re Goldcorp Exchange Ltd (In Receivership) [1995] 1 AC 74.

  67. In re Broad, ex parte Neck (1884) 13 QBD 740; Lariviere v Morgan (1874–75) LR 7 HL 423; In re Tidd [1893] 3 Ch 154.

  68. [1980] 1 WLR 219, 223. As to the nature of presumed resulting trusts, we take the view that they are consensual trusts rather than trusts arising by operation of law: see Swadling (1996); Swadling (2008); Mee (2017).

  69. Barclays Bank Ltd v Quistclose Investment Ltd [1970] AC 567, 580.

  70. Ibid., 580-581.

  71. Meagher and Gummow (1986), p 171. The most up-to-date edition (8th) changed its authors to Heydon & Leeming, who deleted the anti-Quistclose quote, radically arguing that precisely due to Quistclose the doctrine of trust and debt being mutually exclusive ‘is no longer tenable’: Heydon and Leeming (2016), p 12.

  72. ‘Orthodoxy’ by Swadling in Swadling (2004).

  73. Carreras Rothmans Ltd v Freeman Mathews Treasure Ltd [1985] Ch 207; Re Chelsea Cloisters (1981) 41 P & CR 98; Re EVTR [1987] BCLC 646; In re Northern Developments (Holdings) Ltd, unreported, 6 October 1978.

  74. E.g., Re Bond Worth Ltd [1980] 1 Ch 228 (supply of goods).

  75. Worthington (1996), p 70, although Professor Worthington herself normatively suggested an expansion of the application scope of Quistclose.

  76. Graziadei et al. (2005), pp 459-462.

  77. Sin (1997), pp 101-104.

  78. Financial Services and Markets Act 2000, s 242(2).

  79. Re SSSL Realisations (2002) Ltd (In Liquidation) [2004] EWHC 1760 (Ch), [2005] 1 BCLC 1 [26]; Ho (2004), p 494; Gullifer (2018), paras. 1–86.

  80. Hypothetically, the junior beneficiary may well be a debtor owing the senior beneficiary a pre-existing debt (under a contract prior to the creation of the trust in question), though this need not be the case and is irrelevant to the present topic.

  81. Gullifer and Payne (2020), pp 267 and 281.

  82. Restatement (Third) of Trusts, § 104(1)(b) and (d); Gallanis (2017), pp 920-922.

  83. For a discussion on financial law enforcement, see Xu and Xu (2020).

  84. Xintuo Gongsi Guanli Banfa (Measures for the Administration of Trust Companies) (promulgated on 23 January 2007), Art. 34, item 3.

  85. Xintuo Gongsi Jihe Zijin Xintuo Jihua Guanli Banfa (Measures for the Administration of Trust Companies’ Trust Plans of Assembled Funds) (revised on 4 February 2009), Art. 8, item 1 [emphasis added]. See also Art. 11, para. 1, item 1 of the same regulation.

  86. According to the final report, the size of local debt doubled after 2008 and was around 10.7 trillion RMB by the end of 2009, see ‘The audited 10 trillion RMB local government debt’, http://www-gov-cn.vpn.sdnu.edu.cn/jrzg/2011-06/30/content_1896457.htm (accessed 12 February 2022).

  87. Securities Investment Fund Law (2015 Amendment), Arts. 20, 77 and 103, although it should be noted that the phrase ‘in any way’ or its equivalent does not appear in any of these three provisions.

  88. Shanghai Zhengquan Jiaoyisuo Fenji Jijin Yewu Guanli Zhiyin (Shanghai Stock Exchange’s Guidelines for the Administration of Structured Fund Business) (promulgated on 25 November 2016).

  89. Shenzhen Zhengquan Jiaoyisuo Fenji Jijin Yewu Guanli Zhiyin (Shenzhen Stock Exchange’s Guidelines for the Administration of Structured Fund Business) (promulgated on 25 November 2016).

  90. Zhongguo Zhengquan Jiandu Guanli Weiyuanhui Guanyu Baoben Jijin de Zhidao Yiian (The CSRC’s Guiding Opinions on Capital Guarantee Funds) (promulgated on 26 October 2010, repealed on 24 January 2017).

  91. Guanyu Bixian Celve Jijin de Zhidao Yijian (The CSRC’s Guiding Opinions on Strategic Hedge Funds) (promulgated on 24 January 2017), Art. 23.

  92. See Sect. 3.1.2 of this paper.

  93. Lu and Lu (2017).

  94. Guanyu Qingli Zhengdun Weifa Congshi Zhengquan Yewu Huodong de Yijian (Opinions on the Clean-up and Rectification of Illegal Securities Business Activities) (promulgated on 12 July 2015); Guanyu Jinyibu Luoshi Youguan Shixiang de Tongzhi (Notice on Further Implementing the Relevant Issues) (promulgated on 31 August 2015); Zhongguo Zhengquan Jiandu Guanli Weiyuanhui Guanyu Jixu Zuohao Qingli Zhengdun Weifa Congshi Zhengquan Yewu Huodong de Tongzhi (The CSRC’s Notice on Continuing to Effectively Conduct an Overhaul to Eliminate Illegal Securities Trading Activities) (promulgated on 17 September 2015).

  95. For instance, the National Audit Office carried out two national campaigns auditing local government debt in 2010 and 2013 respectively. The State Council subsequently issued the Notice on Issues Related to Strengthening Supervision of Shadow Banking and established an institutional regulatory framework to discipline shadow banking.

  96. CBIRC Research Unit (2020).

  97. Zhongguo Renmin Yinhang, Zhongguo Yinhang Baoxian Jiandu Guanli Weiyuan Hui, Zhongguo Zhengquan Jiandu Guanli Weiyuanhui, Guojia Waihui Guanliju Guanyu Guifan Jinrong Jigou Zichan Guanli Yewu de Zhidao Yijian (Guiding Opinions of the People’s Bank of China, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange on Regulating the Asset Management Business of Financial Institutions) (promulgated on 27 April 2018).

  98. Ibid., Art. 3.

  99. See Sect. 4.1.2 of this paper.

  100. Chinese Civil Code, Art. 153, para. 1.

  101. Civil Adjudication Tribunal No 2 of the Supreme People’s Court (2019), pp 482–485.

  102. Hunan Express Finance Co Ltd v Anxin Trust Co Ltd [2020] Hunan High People’s Court, XMZ No. 1598, https://mlaw.wkinfo.com.cn/judgment-documents/detail/MjAzMzI1MTMzMzk (accessed 12 February 2022).

  103. Jiang Deyu v Xia Linfeng [2020] Nanjing Intermediate People’s Court, S01MZ No. 1421, https://mlaw.wkinfo.com.cn/judgment-documents/detail/MjAzMDY2NTUyMzg (accessed 12 February 2022). Cf. Lai Wenjing v Guangzhou Caida Investment Management Co Ltd [2019] Y01MZ No. 23878, https://mlaw.wkinfo.com.cn/judgment-documents/detail/MjAyOTYwNDAyODQ (accessed 12 February 2022).

  104. See Sect. 3.2.1 of this paper.

  105. Thole v. U.S. Bank N. A., No. 17–1712, 590 U. S. ____ (2020) (slip. op., at 4).

  106. Dannemann and Schulze (2020), p 185.

  107. Chinese Civil Code, Arts. 122 and 157. This is particularly meaningful in collective investment scenarios, where, unlike in non-collective scenarios, an individual investor as one of the beneficiaries under a collective investment trust does not have unconditional power to immediately terminate the trust to withdraw the investment money: Trust Law 2001, Art. 50, cf. Saunders v Vautier (1841) 4 Beav 115, 49 ER 282.

  108. As to prospective investors, the current ‘half voidness’ approach (the promised return clause is void while the trust is valid) has the same level of alarming effect as the ‘complete voidness’ position, for these investors know that they do enjoy the safeguard of absolute payment in either mode. Consequently, compared to the current ‘half voidness’ approach for both pre-existing investors and prospective investors, there is no prospect of setting a transition period from temporary ‘half voidness’ to future ‘complete voidness’.

  109. Zhang Yongdong v Youchoose Capital Management Co Ltd [2019] Beijing No. 1 Intermediate People’s Court, J01MZ No. 10584, https://mlaw.wkinfo.com.cn/judgment-documents/detail/MjAyOTEzODg4NTg (accessed 12 February 2022); Everbright Cloud Pay Internet Co Ltd v Zhou Chengdong [2019] Shanghai Pudong New District People’s Court, H0115MC No. 2704, https://mlaw.wkinfo.com.cn/judgment-documents/detail/MjAzMDQ5OTMxMDE (accessed 12 February 2022); Cai Liqin v China Bohai Bank Co Ltd [2020] Beijing No. 2 Intermediate People’s Court, J02MZ No. 876, https://mlaw.wkinfo.com.cn/judgment-documents/detail/MjAzMDY1OTA0Mzk (accessed 12 February 2022).

  110. See Sect. 4.1.2 of this paper.

  111. Lupoi (2000), Graziadei et al. (2005) and Kulms (2016).

References

  • Acharya V, Qian J, Su Y, Yang Z (2021) In the shadow of banks: wealth management products and issuing banks’ risk in China. NYU Stern School of Business Working Paper. https://ssrn.com/abstract=3401597. Accessed 12 Feb 2022

  • Allen F, Gu X (2020) Shadow banking in China compared to other countries. Manch Sch 89:407–419

    Article  Google Scholar 

  • Allen F, Qian Y, Tu G, Yu F (2019) Entrusted loans: a close look at China’s shadow banking system. J Financ Econ 133:18–41

    Article  Google Scholar 

  • Allen F, Gu X, Jun Q, Qian Y (2020) Implicit guarantees and the rise of shadow banking: the case of trust products. Imperial College London Working Paper. https://cfrc.pbcsf.tsinghua.edu.cn/Public/Uploads/upload/CFRC2019_1864.pdf. Accessed 12 Feb 2022

  • Bai C, Hsieh C, Song Z (2016) The long shadow of a fiscal expansion. Brook Pap Econ Act 60:309–327

    Google Scholar 

  • CBIRC Research Unit (2020) The report of China’s shadow banking. Financ Regul Res 11:1–23 (in Chinese)

    Google Scholar 

  • Chen Z, He Z, Liu C (2020) The financing of local government in China: stimulus loan wanes and shadow banking waxes. J Financ Econ 137:42–71

    Article  Google Scholar 

  • Civil Adjudication Tribunal No 2 of the Supreme People’s Court (2019) Understanding and applying the Minutes of Civil and Commercial Trials for All Courts Nationwide. People’s Court Press, Beijing

    Google Scholar 

  • Dang T, Liu L, Wang H, Yao A (2019) Shadow banking modes: the Chinese versus US system. https://ssrn.com/abstract=3491955. Accessed 12 Feb 2022

  • Dannemann G, Schulze R (2020) German Civil Code. Volume I: Books 1–3. Article-by-article commentary. CH Beck, Munich

  • Ehlers T, Kong S, Zhu F (2018) Mapping shadow banking in China: structure and dynamics. BIS Working Paper No. 701. https://ssrn.com/abstract=3122350. Accessed 12 Feb 2022

  • Financial Stability Board (2011) Shadow banking: scoping the issues. https://www.fsb.org/wp-content/uploads/r_110412a.pdf. Accessed 12 Feb 2022

  • Gallanis TP (2017) A concise restatement of donative transfers and trusts. American Law Institute & West Academic Publishing, Philadelphia

    Google Scholar 

  • Graziadei M, Mattei U, Smith L (2005) Commercial trusts in European private law. Cambridge University Press, Cambridge

    Book  Google Scholar 

  • Gullifer L (2018) Goode and Gullifer on legal problems of credit and security, 6th edn. Sweet & Maxwell, London

    Google Scholar 

  • Gullifer L, Payne J (2020) Corporate finance law: principles and policy, 3rd edn. Hart Publishing, Oxford

    Google Scholar 

  • Guo L, Xia D (2014) In search of a place in the sun: the shadow banking system with Chinese characteristics. Eur Bus Organ Law Rev 15:387–418

    Article  Google Scholar 

  • Hachem K (2018) Shadow banking in China. Annu Rev Financ Econ 10:287–308

    Article  Google Scholar 

  • Hachem K, Song Z (2021) Liquidity rules and credit booms. J Polit Econ 129:2721–2765

    Article  Google Scholar 

  • Heydon JD, Leeming MJ (2016) Jacobs’ law of trusts in Australia. LexisNexis Butterworths, Chatswood

  • Ho L (2012) Trust laws in China: history, ambiguity and beneficiary’s rights. In: Smith L (ed) Re-imagining the trust: trusts in civil law. Cambridge University Press, Cambridge, pp 183–221

    Chapter  Google Scholar 

  • Ho L (2020) Business trusts in China: a reality check. Univ Cincinnati Law Rev 88:767–795

    Google Scholar 

  • Ho L, Lee R, Jin J (2013) Trust law in China: a critical evaluation of its conceptual foundation. In: Ho L, Lee R (eds) Trust law in Asian civil law jurisdictions: a comparative analysis. Cambridge University Press, Cambridge, pp 80–98

    Chapter  Google Scholar 

  • Ho LC (2004) A matter of contractual and trust subordination. J Int Bank Law Regul 19:494–499

    Google Scholar 

  • Hsu C (2016) Eastern trusts, western contracts: the transition from contract to trust in China’s trust industry. Eur Bus Organ Law Rev 17:173–193

    Article  Google Scholar 

  • Huang H (2010) Institutional structure of financial regulation in China: lessons from the global financial crisis. J Corp Law Stud 10:219–254

    Article  Google Scholar 

  • Jiang W (2015) The future of shadow banking in China. Columbia Business School Research Paper No. 16-33. https://ssrn.com/abstract=2769603. Accessed 12 Feb 2022

  • Kulms R (2016) Trusts as vehicles for investment. Eur Rev Priv Law 24:1091–1118

    Article  Google Scholar 

  • Lee R (2009) Conceptualizing the Chinese trust. Int Comp Law Q 58:655–670

    Article  Google Scholar 

  • Li C (2016) The changing face of shadow banking in China. Asia focus. https://www.frbsf.org/banking/files/Asia-Focus-The-Changing-Face-of-Shadow-Banking-in-China-December-2016.pdf. Accessed 12 Feb 2022

  • Liang Y (2016) Shadow banking in China: implications for financial stability and macroeconomic rebalancing. Chin Econ 49:148–160

    Article  Google Scholar 

  • Liu G (2016) Trusts without fiduciary duty: the commercial nature of Chinese trust business. Trusts & Trustees 22:1104–1117

    Article  Google Scholar 

  • Liu K (2019) Chinese shadow banking: the case of trust funds. J Econ Issues 53(4):1070–1087

    Article  Google Scholar 

  • Lu L, Lu L (2017) Unveiling China’s stock market bubble: margin financing, the leveraged bull and governmental responses. J Int Bank Law Regul 32:146–160

    Google Scholar 

  • Lupoi M (2000) Trusts: a comparative study. Cambridge University Press, Cambridge

    Google Scholar 

  • Meagher R, Gummow W (1986) Jacobs’ law of trusts in Australia, 5th edn. Butterworths, Sydney

    Google Scholar 

  • Mee J (2017) The past, present, and future of resulting trusts. Curr Leg Probl 70:189–225

    Article  Google Scholar 

  • Moody’s (2020) Quarterly China Shadow Banking Monitor: March 2020

  • Reid KGC (2012) Conceptualising the Chinese trust: some thoughts from Europe. In: Chen L, van Rhee CH (eds) Towards a Chinese civil code: comparative and historical perspectives. Brill, Leiden, pp 209–231

  • Shen W (2016) Shadow banking in China: risk, regulation and policy. Edward Elgar Publishing, Cheltenham

    Book  Google Scholar 

  • Sin KF (1997) The legal nature of the unit trust. Clarendon Press, Oxford

    Google Scholar 

  • Song Z, Storesletten K, Zilibotti F (2011) Growing like China. Am Econ Rev 101:196–233

    Article  Google Scholar 

  • Swadling W (1996) A new role for resulting trusts. Leg Stud 16:110–131

    Article  Google Scholar 

  • Swadling W (2004) The Quistclose trusts: critical essays. Hart Publishing, Oxford

    Google Scholar 

  • Swadling W (2008) Explaining resulting trusts. Law Q Rev 124:72–102

    Google Scholar 

  • Tsai K (2017) When shadow banking can be productive: financing small and medium enterprises in China. J Dev Stud 53:2005–2028

    Article  Google Scholar 

  • Worthington S (1996) Proprietary interests in commercial transactions. Clarendon Press, Oxford

    Google Scholar 

  • Wu Z (2014) Transplant of the Quistclose trust into Chinese law: a critical assessment. China EU Law J 3:253–274

    Article  Google Scholar 

  • Xu G, Faure M (2019) Financial repression in China: short-term growth but long-term crisis. Loyola Los Angeles Int Comp Law Rev 42:1–77

    Google Scholar 

  • Xu W, Liu Y (2021) Does reputational capital affect credit rating agencies? Empirical evidence from a natural experiment in China. Eur J Law Econ 51:433–468

    Article  Google Scholar 

  • Xu W, Xu G (2020) Understanding public enforcement of securities law in China: an empirical analysis of the enforcement actions of the CSRC and its regional offices against informational misconduct. Int Rev Law Econ 61:105877. https://doi.org/10.1016/j.irle.2019.105877

Download references

Acknowledgements

Wenming Xu gratefully acknowledges the financial support from the Fok Ying Tung Education Foundation for Junior Faculty in Higher-Education Institutions and the Fundamental Research Funds for the Central Universities; Zhicheng Wu gratefully acknowledges the financial support from the National Social Science Fund of China (19CFX048).

Author information

Authors and Affiliations

  1. Associate Professor and Associate Dean, School of Law and Economics, China University of Political Science and Law, Beijing, China

    Wenming Xu

  2. Assistant Professor, School of Law, Renmin University of China, Beijing, China

    Zhicheng Wu

  3. Research Fellow of Law and Technology Institute, Renmin University of China, Beijing, China

    Zhicheng Wu

Authors
  1. Wenming Xu
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Zhicheng Wu
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Zhicheng Wu.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Xu, W., Wu, Z. Regulation-Driven Legal Doctrines of Investment Trusts in China. Eur Bus Org Law Rev 23, 391–421 (2022). https://doi.org/10.1007/s40804-022-00242-6

Download citation

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s40804-022-00242-6

Keywords

Search

Navigation