The nation is not prepared to work out a law to govern trust companies, but legislation on basic trust relations is urgently needed, according to national legislators.
"The fledgling trust industry in this country still has a lot of growing up to do and related legislation should wait until we know more what we're dealing with," said legislator Li Yining.
But it is urgent to work out a law on basic trust relations to protect the rights of all parties, including trustees, trustors and beneficiaries, Li said.
The trust business is burgeoning in China as more individuals and institutions ask trust companies to help them manage their properties, according to Zhu Shaoping, a senior legislative official with the National People's Congress (NPC) Financial and Economic Committee.
However, Zhu said many of the trust companies are actually undertaking banking business, which is strictly banned by the State Council.
The People's Bank of China, the country's central bank, promulgated a rule governing the administration of trust companies early this year.
The law regulating the trust industry could be based on the implementation of this administrative rule, Zhu said.
The long-suspended draft law was first read by national legislators six years ago.
The part governing trust companies was removed from the draft during the second round of deliberation in June last year.
But the inclusion of regulations for trust companies has remained a focal point of arguments during previous discussions of the draft trust law.
The draft law was submitted to the ongoing 21st session of the Standing Committee of the Ninth NPC on Tuesday and is likely to be voted on at the end of the five-day session.
A draft legislation is usually passed after three readings by national legislators, according to the Law on Legislative Procedure.
(China Daily 04/26/2001)
