Legal Character Of Asset Management Companies In China:Policy Or Commercial?

From the April, 1999, China began to establish four Asset Management Companies (hereinafter AMC) to settle for the non-performing loan(hereinafter NPL) problems of Chinese Big 4 banks, and a series of complex policy objectives are supposed to obtain by them, which include maximizing the recovery of Non-performing Financial Assets, urging the reform of the country's traditional bank system, and helping the State owned Enterprises out of their debt trouble. During the process of the AMCs'operation, because of the expanse of their business scope and the changing minds of supervisor, the confusion and conflict of their commercial business and policy tasks became more and more obvious. How to understand that phenomena and how to solve it by reasonable rules are the main issue of this dissertation.This dissertation discussed about the theories of AMC as a model to solve NPL problems, and to clarify what is its original nature. But the real focus of this article, is to analyze the actual NPL disposal of Chinese AMCs, analyze the facts hope to make objective evaluation of their results. Through the collecting, organizing and analyzing of facts, we can distinguish inner relationship of the problem, know what is wrong on earth, and give out a proper suggestion of legal design.From the analysis of AMCs'objectives, funding formats and performing functions, we took the opinion that Chinese AMCs fit for all the policy characteristics and their most important interest is their policy objectives. But just during the process of policy tasks, before those objectives had been obtained, before the mature of supervision system and before the policy support had been realized, commercial business interposed, making confusion to both supervisors and AMCs. Recently, one way to solve that problem has been discussed intensively, that is to abandon AMC's policy nature completely and transform them to commercial entities whose highest objective is profit-making. However, through our judgment of facts, it is not the time to end up policy NPL tasks, those policy interests inside need a policy institution to maintain. It's not economically efficient, if we now transform AMC to commercial entities and transit those tasks to other institutions, and also if we keep those policy tasks in a"commercial"entity, we cannot see any obvious evidence that we have solved the confusion problem.Therefore, we believe that AMC in China should be regulated as a policy institution. Its focus of operation cannot be the expansion and survival of its own institution and how to protect policy interest should be put in the first place. So before those interests are satisfied, we should insist on the AMCs'policy nature. What we should do is to improve the regulation of AMCs. First, we should make AMCs'policy position legally confirmed, to avoid possible infraction of policy interests. Then, we should change the legal system to improve the efficiency of AMCs. There are two ways: one is to set up efficient governance and supervising system to make up the disadvantages of policy entities, and the other is to give out certain policy and legal support to minimize the obstacle of their operation.