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China's First Trust Law to Take Effect
China's first Trust Law, adopted by the country's top legislature in April, will take effect on October 1, the country's National Day.
The law, covering basic principles between trustors and trustees, will lead to a series of changes in China's trust businesses, experts here noted.
China's central bank, the People's Bank of China, announced Saturday that it will amend some items of the rules on trust companies according to the new law.
"The law will bring China's trust industry into a new stage," said Cheng Siwei, vice-chairman of the National People's Congress Standing Committee.
Trust companies came back to China some 20 years ago when the country adopted the economic reform and opening-up policy. However, the absence of legal rules or guidelines for the trust business created problems.
China has had as many as 1,000 trust companies at a time, but only 239 existed in 1999 when the central bank launched a restructuring within the industry. Insiders predicted that the number will be fewer now.
The law will provide legal support for domestic trust companies when they develop new trust businesses with foreign counterparts, said Yao Haixing, general manager of China International Trust & Investment Corp. Development, Inc.
Competition in the financial market will be sharper after China enters the World Trade Organization, so both the companies and the legal framework have to be globally accepted, she added.
The present Trust Law makes no mention of practices of trust companies. Yao expressed her expectation that the such stipulations will be added as soon as possible.
The conditions for including items regulating trust companies are not yet in place as the trust industry is still undergoing reform, said Cheng Siwei, adding that the items will be drafted when the top legislators think the conditions in the country are mature.
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