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The Chinese Trust Industry in the Near Future Towards a Sparse Network: From Guanxi to Institutionalized Trust?

In: Ownership of Trust Property in China

Author

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  • Zhen Meng

    (Nanjing University of Science and Technology)

Abstract

This Chapter first explains the potential problems of Chinese trust industry from the perspective of both the service providers and the consumers. In this respect, it analyzes the unsustainability of current trust business model, and also illustrates the demand of asset management services, especially family trusts, for Chinese HNWIs. Then this Chapter points out that the Chinese trust network is transforming towards a sparse network. Actors within a sparse network are less likely to have social capital that they can rely on to achieve cooperation. In a sparse network, lack or low degree of mutual trust between actors within the network is more likely to happen. Consequently, trust business in China is facing a dilemma, which is also analyzed in this Chapter. On one hand, there is an increasing demand of trust products for HNWIs; on the other hand, the industry is stepping into the decline stage of the business life cycle. In view of this, this chapter provides a possible justification of Article 2 of Chinese Trust Law; then it explains the reasons why the ambiguity of trust law regarding the ownership of trust property might matter in the near future. Following this is a suggestion on possible solutions that could be provided by the trust law for the potential trust business dilemma.

Suggested Citation

  • Zhen Meng, 2017. "The Chinese Trust Industry in the Near Future Towards a Sparse Network: From Guanxi to Institutionalized Trust?," Perspectives in Law, Business and Innovation, in: Ownership of Trust Property in China, chapter 0, pages 135-157, Springer.
    • Handle: RePEc:spr:perchp:978-981-10-5846-2_7
    DOI: 10.1007/978-981-10-5846-2_7
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