Ownership of Trust Property in China (eBook)

Zhen Meng is both a lecturer at the Department of Law, School of Intellectual Property, Nanjing University of Science and Technology, China, and a researcher at the Intellectual Property Development & Research Center of Jiangsu, China. She holds an LLD from the Graduate School of Law in Kyushu University, Japan, and an LLM and LLB from China University of Political Science and Law. Her research has focused on civil law, commercial law, and Intellectual property law, particularly trust law. Current publications: Should China clarify the ownership of trust assets? A social network perspective. Trusts & Trustees 21(5) 2015, pp. 492–500; Legal certainty and trusts in China (in Fenwick and Wrbka eds. Legal certainty in a contemporary context, 2016) .

Acknowledgements 6
Contents 7
About the Author 11
List of Figures 12
List of Tables 14
1 Introduction 15
Abstract 15
1.1 Background and Research Problem 15
1.2 The Academic Debate on the Location of Ownership of Trust Property in China 18
1.3 Aim, Outline, and Methodology 19
1.4 Originality 23
References 24
2 Trust Law of China and Its Uncertainty Regarding the Location of Ownership of Trust Property 26
Abstract 26
2.1 Background of Chinese Trust Law 28
2.1.1 The Development and Problems of Chinese Trust Business Before the Enactment of Trust Law 28
2.1.2 The Necessity for Chinese Economy of Further Development of Chinese Trust Industry 32
2.1.3 Trust Law as a Necessary Solution for the Problems of Chinese Trust 34
2.1.4 The Legislative History of Chinese Trust Law 34
2.1.5 Modern Chinese Law Established on Civilian System 35
2.2 Difficulties for Civilian Lawyers to Understand the Common Law “Trust” 37
2.2.1 Trust Law: A Typical Common Law Construct 37
2.2.2 Trend in the Reception of Trust All Over the World 40
2.2.3 The Conflicts Between Common Law Trusts and Civil Law 41
2.3 Significant Problem: Focusing on Article 2 of Chinese Trust Law 42
2.3.1 Legal Uncertainty Regarding the Ownership of Trust Property in China 42
2.3.2 Practical Problems Caused by Article 2 of Chinese Trust Law 44
2.4 Interim Conclusion 46
References 47
3 “Dual Ownership” Versus “Absolute Ownership”: A Comparative Analysis 49
Abstract 49
3.1 Conceptualization of “Dual Ownership” and “Absolute Ownership” 50
3.1.1 The Development of the Concept of “Dual Ownership” in Common Law 50
3.1.2 The Concept of “Absolute Ownership” in the Civil Law Jurisdictions 53
3.2 Debates Within Chinese Legal Circle Regarding Ownership of Trust Property 56
3.2.1 An Opinion Contending Settlor as the Owner of Trust Property 57
3.2.2 An Opinion Contending Trustee as the Owner of Trust Property 60
3.2.3 An Opinion Contending Beneficiary as the Owner of Trust Property 64
3.2.4 Other Minor Opinions 65
3.2.4.1 An Opinion Contends that Either the Settlor or Trustee Is the Owner of Trust Property 65
3.2.4.2 An Opinion Contending that Ownership Is with Either the Settlor or the Beneficiary 67
3.2.4.3 An Opinion that Contends the Settler, Trustee and Beneficiary Hold Partial Powers on Trust Property Respectively 67
3.3 Diverse Approaches to Decide the Location of the Ownership of Trust Property in Various Jurisdictions 68
3.3.1 Trusts in Mixed Jurisdictions: Scotland, Quebec, Louisiana, South Africa 68
3.3.1.1 Scotland 68
3.3.1.2 Quebec 71
3.3.1.3 Louisiana 73
3.3.1.4 South Africa 75
3.3.2 Trusts in East Asia 76
3.3.2.1 Japan 76
3.3.2.2 South Korea 80
3.3.2.3 Taiwan 81
3.4 Interim Conclusion and Limits of Existing Research 83
References 86
4 Social Capital, Trust, and Guanxi (??) 88
Abstract 88
4.1 Theoretical Background: Reviewing Social Capital 90
4.1.1 Bourdieu 90
4.1.2 Coleman 92
4.1.3 Putnam 94
4.1.4 Nan Lin 95
4.1.5 Application of the Concept of Social Capital to Academic Areas 97
4.2 Substantial Value of Social Trust in Establishing Commercial Relationships 98
4.2.1 An Understanding of Trust: A Choice to Place Oneself at Risk 99
4.2.2 Role of Trust in Economic Growth 100
4.2.3 Personal Trust Versus Institutionalized Trust 102
4.3 Guanxi: An Unique Phenomena in China 103
4.3.1 The Notion of Guanxi 103
4.3.2 Impacts of Guanxi on Chinese Business Culture 104
4.4 Social Network Theory 106
4.5 Hypotheses 109
4.6 Interim Conclusion 110
References 111
5 An Empirical Study on China Trust Industry: Methods 114
Abstract 114
5.1 Empirical Research Questions 115
5.2 Empirical Research Methods 115
5.3 Source of Empirical Material—I: Documents 118
5.3.1 Data from China Trust Association 118
5.3.2 Reports on China’s Trust Industry 119
5.4 Source of Empirical Material—II: Targeted In-Depth Interview 120
5.4.1 Research Design 120
5.4.2 The Sampling 120
5.5 Selected Results of the Empirical Research 122
5.5.1 Chinese New Middle-Class Citizens Show Great Willingness to Invest into Real Estate Market 122
5.5.2 High Net Worth Individuals in China Are Frustrated to Utilize Domestic Wealth Management Service Providers 123
5.5.3 High Degree of Mutual Trust Between Clients and Commercial Banks in China 124
5.5.4 Role of Guanxi in Chinese Trust Business 125
5.5.5 Lack/Low Level of Trust of New Middle-Class Towards Trustees 126
5.5.6 The Nascent Transition of Chinese Trust Business 126
5.6 Interim Conclusion and Limitations 127
References 128
6 Current Trust Industry in China: A Dense Network 129
Abstract 129
6.1 The Thriving Commercial Trust Business in China 130
6.2 The Functions of Trusts in China Today 133
6.2.1 Financing Tool for Cash-hungry Sectors 133
6.2.2 Effective Tool to Get High Return of Investment for Investors 134
6.3 Dense Network as a Possible Facilitator of the Growth of Chinese Trust Industry 136
6.3.1 Evidences for the Dense Network Representing China’s Trust Industry 136
6.3.2 Mutual Trust and Network Effects of Dense Network 140
6.4 Interim Conclusion 142
References 142
7 The Chinese Trust Industry in the Near Future Towards a Sparse Network: From Guanxi to Institutionalized Trust? 144
Abstract 144
7.1 Potential Problems of Chinese Trusts: From the Perspective of Service Providers 144
7.1.1 Unsustainability of Chinese Trust Business Model 145
7.1.2 Lack the Capability of Property Management in Chinese Trust Companies 148
7.2 Potential Problems of Chinese Trusts: From the Perspective of Consumers 149
7.2.1 Demand for Property Management Services in China 149
7.2.2 Family Trusts Emerging 152
7.3 Nascent Transformation of the Chinese Trust Network: Towards a Sparse Network 155
7.4 Chinese Trust Business Dilemma 156
7.5 The Way Forward: What Is Next? 159
7.5.1 Possible Justification of Article 2 in Chinese Trust Law 159
7.5.2 Clarification of the Location of Ownership of Trust Property? 161
7.5.3 Facilitating Social Capital: Building Institutionalized Trust 163
7.6 Interim Conclusion 164
References 165
8 Conclusion 167
Abstract 167
Appendix A: List of Sample Interview Questions 173
Appendix B: List of Interviewees 175
Appendix C: Selected Inquiries and Answers in the Interviews 176