Volume 90, Number 2

May 2015

Modernizing Chinese Trust Law

Stephen Tensmeyer

There are important uses for trusts that are essentially unavailable in China. Family trusts and larger-scale trusts run by private parties for the public interest are extremely rare and face a difficult regulatory environment. While China’s Trust Law itself recognizes a distinction between “civil” and “commercial” trusts, the regulations governing trust businesses recognize no such distinction. These regulations impose conditions that make small-scale family trusts and collective civil trusts almost impossible. It is unclear whether these regulations apply to all trusts, but even if they do not, the narrow view of trusts that they promote limits the usefulness of trusts in other areas. However, these types of trusts could be accommodated by easy reforms revising the regulatory and legal framework to permit and facilitate family and public interest trusts.