Trust System In China Absence Of Legislation And Perfect

The article is focusing on the trust system in China, which was original copied from other countries and regimes during the process of Chinese system transfer. The fundamental function of trust system is about assets transfer and assets management, upon which capital financing, capital accumulation and other functions of social welfare have been developing. Due to its special functions on efficient management of resources and the agility and convenience of promoting and conduction of commonweal development, the trust system is becoming one of most important fields which shall be developed immediately. Meanwhile, it is also the requirement of the current Chinese society on assets management and long term financing, because the two have formed certain combined foundation. During the process of legislation, transfer and perfection of laws (the process of rule by law) for last 20 years, few systems of property, like trust system, have encountered so much violent legal conflict. From 1982 to 1997, the Chinese trust industry had experienced four times serious reforms,but none would avoid the strange circumstances of "reforms-chaos -re-reforms-re-chaos". In 1997, the authority of financial administration undertook to change the chaos circumstances of the trust industry, and after 6 years the number of trust companies had been cut from 240 in 1997 to 56 in 2003. Meanwhile, the legislation of trust has also been speeded up. October 2001, "Trust Law of People's Republic of China" was issued, and then the People's Bank of China published "Measures for the Administration of Trust Investment Companies" and "Interim Measures for the Administration of Capital Trust of the Trust and Investment Companies" and so on. However, when the fifth reforms has not yet finished, a number of scandals had occurred, including: Aijian Trust embezzling a couple hundred of millions RMB trusted capital for stock market venture, Taixin Trust lost 700 million RMB in stock market investment, and Jinxin Trust lost up to 4.2 billion RMB and required to stop operation.This Article will start with the historical evolution of trust system to explore the development of trust system which has experienced from non-profit simple civil trust conducted by individuals to commercial trust with profit purposes operated by juridical persons, and the wide room for the development of commercial trust in China. And then, the author will have a case study of the affair of Jinxin Trust which was required to stop operation and to be regrouped, to explore the huge damages what the affair may cause to the whole society and the main problems regarding to the legislation in Chinese trust systems, including: the lack of action standard of basic trust responsibility principals with "Trust Law"; the publication rules of trust lacking maneuverability; the damages liability when the assignee breaching trust; the problems of current trust supervision systems and etc.Finally, the author will upon the special situations of China propose to perfect the legislation regarding to Chinese trust system, by correcting some problems within thelegislation in accordance with the advanced experiences in legislation of foreign countries and regimes. The author suggests to refer the trust legislation experiences of USA and UK to perfect the honest duty rule and publish "Caution Investor Law", to perfect our trust publication system and the damages liability when the assignee breaching trust, and then to modify and perfect basic trust laws, in light of the characters of Chinese trust operation and the trend of finance mixed operation, to fulfill the efficient supervision of trust industry.The author applies dissertation methods of comparison and deduction conclusion, which will comparatively reasonably draw the conclusion of this article. Where the author is conducting the deduction, he uses foreign comparatively mature theory and practice experience for reference and concludes the reality of China, by using logical reasoning of deduction and conclusion, to analyze the shortcomings of our legislation regarding to trust system and present the proposals for perfection of our trust systems in legislation, which will have positive effects on the development of Chinese trust industry.