Research On The Developing And Functioning Of China`s Trust Business

The system of trust has been widely applied as a legal system in western countries in the realms of civil, commercial and financial laws, and is widely applied with the continuously innovation of finance. However, the introduction of trust system to China has encountered frustrations and trust business has witnessed constant clean-up and rectification since its recovering after the adoption of "open and reform" policy. Meanwhile, the positioning of trust business in China also went through continuous discussion and sublation. Presuming that the development of trust business is an epitome of the development of financial system of China, it is also the advocator and witness of the process of China from financial repression to financial marketization, and from government-exogenous-construction to market-endogenous-evolution with the deepening of development of financial system of China. This thesis explored in depth the history and presence of trust business and its history, practice and future in China against the larger background of financial development in China. It studies the history of trust business in China based on the theory of institutional economics. Oriented by financial development theory, the interaction between the development of finance and trust business is discussed, and thus the promoting of interest rate liberalization, the emergence of mixed operation, and the further development of trust business in the era of general asset management are examined. Besides, it provides effective recommendation on policies on both theoretical and practical level. The thesis will be divided into eight chapters.Chapter One is the general introduction of the thesis, which introduces the topic and the starting point of the thesis. This chapter introduces the meaning and methodology of the study, and the innovation and structure of the thesis.Chapter Two includes the references and theoretical framework, which respectively reviews the studies on development of finance and functioning of trust business carried by foreign scholars, and clearly defines relevant terminologies of trust. It clarifies the current state of research in and out of china, provides valuable references to the topic of the thesis, and meanwhile is the theoretical foundation of the subsequent analyzing. Based on the references, this chapter proposes the research framework of the development of finance and functioning of trust business, which facilitates the logic of the coming analyzing, enriches the references and concentrates the structure of the thesis.Chapter Three introduces the development of functioning of trust business of foreign states. This chapter examines the functioning of trust business of British, United States and Japan, the three of which are all states with vivid character, and are classical representations and mark stones with regarding to the development of trust business. Through comprehensively analyzing on the history, character, and motivating factors of the trust business of the three states, the common motivating factors, differences and developing trend are discovered and thus fare contrasting standard and useful revelation are provided.Chapter Four is the analyzing on the development process of finance of China, which is based on the exploration on the reformation and construction of financial developing index. The development of finance of China is the full background and historic context of the analyzing of the development of functioning of trust business in this thesis. Theoretical discussions of financial development of China are based on the review of the history of the reformation and development of the financial institutions of China; quantification investigations are conducted on the development of finance of China through analyzing of developing trend of monetization and the marketization of currency, capital, as well as the financial institutions of China. General divisions upon the financial development of China are stipulated through the construction of financial development index, which concludes that the financial development of China is highly suppressed before2005, while it has been driven towards marketization since2006. The development of trust business is basically in consistence with the above-mentioned historic context and meanwhile can be deemed as a leading indicator. Based on this presumption, Chapter Five&Six discusses the development of trust business during the process of financial repression and financial marketization respectively.Chapter Five, namely the development of functioning of trust business under the financial repression of China, is based on the development of systems that government-exogenous-construction. This chapter puts the development history of trust business of China into the study framework of development of institutions, applying the theory of New Classical Institutional Economics and the conclusion contributed by Chinese scholars on development of institutions. It discusses the problems of functioning of trust business under the financial repression, and valuates the phenomenon of compulsory development, efficiency of development and "path-reliance"’of China’s trust business under the dominance of China. The conclusion is that the dislocation of function and governance and disorder circles during the development of China’s trust institutions is owing to the fact that the trust institutions which are based on government-exogenous-construction have partly undertaken the responsibilities of a reformation pioneer, and that there exists serious "path-reliance" during the process of institutional reformation. The adoption of "One Law and Two Regulations" concerning trust in2001has significant contribution to the breaking of "path-reliance" and reconstruction of trust institutions. In the developing trend of financial marketization, the impact of induced institutional development will be more obvious.Chapter Six examines the development of functioning of trust business in China during the process of financial marketization, basing on the discussion of the current situation of market-endogenous-evolution. Characteristics are highlighted from three perspectives, namely the detention development of financial marketization compared with goods marketization, the pending problem of "dual systems", and the retrograding of institutions.Therefore, the deeper source of characteristic and problems existing during the developing of China’s trust functioning can be better comprehended, which provides the foundation for the discussion of the interaction between currency and capital marketization with development of trust business. Besides, the developments of trust during the promotion of interest marketization, mix operation of financial trust, as well as the deepening of wealth managing are discussed further.Chapter Seven discusses the positioning of functioning of trust business in China and envisages the blue print and relevant policy recommendations. Based on the previous discussion, this chapter mainly provides suggestions on the threshold, scope, and extent of the functioning of government and market during the developing of trust business and its functioning. It also gives a general presumption and envisages on the further path and layout of China’s trust business, and meanwhile speculates the future development and possible innovations of trust business.Chapter Eight is the conclusion, which reviews the author’s original intention to compose the thesis and concludes the key points of the thesis.