Study Of Real Estate Investment Trusts (reits), The Legal System

China real estate industry, one of the major national economic sectors, whether it blooms or recedes, can exert a great influence on the economic growth and social development of our country. Since Chinese government has strengthened and implemented regulations on the real estate industry, China real estate industry witnesses the bottleneck of funds; meanwhile the public possesses huge capital seeking more profitable investment channels. The real estate investment trusts (REITs) can bridge the two, but confront the pattern choice problem in China.REITs is dividend-paying funds, which invests in real estate buy and sell, development and management. This financial product was launched by Union Trust (USA), aiming to enable individual investors to participate in large-scale, in come-producing real estate investments by raising small amount money. REITs, as an effective investment method, could inject new vitality into the country's capital market and promote real estate industry development.REITs will play important role on China real estate industry and economic growth. It can supply new fund for realty enterprise. It can decrease management risk from banks. It can promote the competition among the realty enterprises. It can make resources allocated suitably. It can promote realty enterprises to enhance management level. It can provide a new investment choice for the capital from the public. It can improve the liquidity of the realty assets. It is beneficial to make information from real estate industry more transparent. It can improve financial system in our country.The research on the REITs in foreign countries, especially in America has been prosperous; however the situation in China is quite scarce, especially in the field of law. Therefore this paper gives a deep insight into the mature patterns of REITs in foreign countries. And then it analyzes the latest experiments of domestic trust industry in developing REITs, and points out that there exist unsolvable problems with the trust mode, and the corporate entity pattern do not apply either. China should design Chinese Real Estate Investment Trusts pattern based on the current financial market and law environment and enact the specific laws.The structure of this paper in composed with three parts.The first part of this paper introduces the basic theory about REITs, such as the origination and evolution, definition, characteristics, categories, functions of REITs.In the second part, the author first introduces the REITs in America, concluding its organized system, specialized management, free transfer, beneficial tariff, and effective supervision and control. Then the author gives a deep sight into China, such as the laws and regulations concerned, the products and practices of the trust companies. In the end the author illuminates the differences of REITs between America and China, and points out the barriers in China to build true REITs.The third part mainly discusses about how to develop REITs in china. In this part, the author makes a strategy for the development of REITs in china, by setting up its initiation mode, the subject and object of REITs, frameworks and management mode etc.