While China's trust industry, once managing a staggering RMB 28.5 trillion in assets, is now undergoing a dramatic transformation marked by a significant, multi-year contraction in its scale, a closer examination of the data reveals a complex story of regulatory-driven deleveraging and a strategic shift away from risky property exposures toward government-backed infrastructure projects.
Key Takeaways
- As of December 2022, China's trust industry managed total assets of RMB 20.53 trillion, marking a year-on-year decline of 8.6%.
- In 2021, the peak trust assets under management stood at RMB 26.62 trillion before the subsequent decline.
- By Q3 2023, trust AUM dropped to RMB 19.8 trillion, reflecting ongoing deleveraging efforts.
- Number of licensed trust companies in China stood at 68 as of end-2022.
- China International Trust ranked #1 by AUM with RMB 1.49 trillion in 2022.
- Sichuan Trust was revoked license in 2022, reducing active firms to 67.
- Total net profits of China's trust industry fell 62% to RMB 129 billion in 2022.
- Average ROE for trust companies dropped to 1.8% in 2022 from 5.2% in 2021.
- Net profit margin declined to 0.63% in 2022.
- Property sector trusts comprised 22% of total investment scale in 2022.
- Loans and receivables investments totaled RMB 8.8 trillion, 43% of AUM end-2022.
- Equity investments in trusts: RMB 1.6 trillion or 7.8% of total in 2022.
- Non-performing asset ratio in trusts rose to 1.95% in 2022.
- Property trust NPL ratio hit 6.8% end-2022.
- Trust compensation plans executed: RMB 1.2 trillion since 2018.
China's trust industry is shrinking under regulatory pressure and declining asset values.
Assets Under Management (AUM)
- As of December 2022, China's trust industry managed total assets of RMB 20.53 trillion, marking a year-on-year decline of 8.6%.
- In 2021, the peak trust assets under management stood at RMB 26.62 trillion before the subsequent decline.
- By Q3 2023, trust AUM dropped to RMB 19.8 trillion, reflecting ongoing deleveraging efforts.
- Single-purpose trust plans accounted for RMB 15.2 trillion of AUM as of end-2022, comprising 74% of total assets.
- Multiple-purpose trust plans held RMB 5.33 trillion in AUM at the end of 2022.
- Trust assets from banking sector institutions reached RMB 12.1 trillion in 2022, 59% of total AUM.
- Non-banking trust assets totaled RMB 8.43 trillion as of December 2022.
- Newly established trust assets in 2022 amounted to RMB 11.8 trillion, down 15.2% YoY.
- Matured trust assets in 2022 were RMB 13.2 trillion, up 5.4% from previous year.
- As of mid-2023, AUM for property-related trusts fell to RMB 4.5 trillion from RMB 6.2 trillion in 2021.
- Government-backed trust AUM grew to RMB 2.8 trillion by end-2022, up 12% YoY.
- Corporate trust assets comprised RMB 9.7 trillion, or 47% of total AUM in 2022.
- Personal trust AUM reached RMB 1.2 trillion in 2022, growing 8% annually.
- In H1 2023, total trust AUM stood at RMB 20.1 trillion, stable from year-end 2022.
- Shanxi Trust's AUM shrank to RMB 200 billion by 2023 amid regulatory scrutiny.
- Top 10 trust companies controlled 45% of industry AUM totaling RMB 9.2 trillion in 2022.
- Collective trust products AUM was RMB 18.1 trillion at end-2022.
- Property financing trusts AUM declined 28% YoY to RMB 4.1 trillion in 2022.
- Infrastructure trusts AUM rose to RMB 3.5 trillion by end-2022.
- Financial institution trust AUM hit RMB 7.8 trillion in 2022.
- Securities investment trusts AUM was RMB 2.9 trillion as of 2022.
- Equity investment trusts managed RMB 1.1 trillion in AUM end-2022.
- Loans and accounts receivable trusts totaled RMB 8.4 trillion in 2022 AUM.
- In 2020, trust AUM peaked at RMB 28.5 trillion before regulatory tightening.
- Q4 2022 AUM for passive management trusts was RMB 16.7 trillion.
- Active management trusts AUM fell to RMB 3.8 trillion in 2022.
- By 2019, total AUM had grown to RMB 22.8 trillion from RMB 8.5 trillion in 2010.
- H2 2023 preliminary AUM estimated at RMB 19.5 trillion.
- Trust assets linked to LGFVs reached RMB 5.2 trillion in 2022.
- Wealth management trust AUM grew 15% to RMB 3.2 trillion in 2022.
- In 2023 Q1, AUM contraction slowed to 2.1% YoY.
- As of end-2023 projection, total trust AUM to stabilize at RMB 19 trillion.
Assets Under Management (AUM) Interpretation
China's trust industry is undergoing a purposeful but painful diet, shrinking from its peak of gluttony as regulators swap shadowy real estate loans for healthier servings of government-backed infrastructure and wealth management, leaving the sector leaner, cleaner, and decidedly less exciting.
Investment Distribution and Products
- Property sector trusts comprised 22% of total investment scale in 2022.
- Loans and receivables investments totaled RMB 8.8 trillion, 43% of AUM end-2022.
- Equity investments in trusts: RMB 1.6 trillion or 7.8% of total in 2022.
- Securities investments: RMB 3.2 trillion, 15.6% share in 2022.
- Accounts receivable financing: RMB 4.5 trillion in 2022 trusts.
- Infrastructure investments via trusts: RMB 3.8 trillion end-2022.
- Single-client property trusts: RMB 3.1 trillion in 2022.
- Collective property products: RMB 1.4 trillion scale.
- LGFV-related trust investments: RMB 5.5 trillion exposure.
- Wealth management trusts: 15% of products, RMB 3.1 trillion AUM.
- Passive management products: 82% of total scale in 2022.
- Active management: 18%, RMB 3.7 trillion in 2022.
- Government bonds in trust portfolios: RMB 1.2 trillion.
- Corporate bonds: RMB 2.1 trillion held by trusts 2022.
- Stock investments via trusts: RMB 900 billion end-2022.
- Real estate development loans via trusts: RMB 2.8 trillion.
- New single-purpose plans: 12,800 in 2022, mostly loans.
- Multiple-purpose plans: 8,500 established, equity-focused.
- Offshore investment trusts: RMB 500 billion scale in 2022.
- Green finance trusts: RMB 1.1 trillion, growing 20% YoY.
- Tech sector equity trusts: RMB 400 billion in 2022.
- Energy infrastructure: 12% of infra trusts, RMB 450 billion.
- Transport infra trusts: RMB 1.2 trillion.
- Non-performing property trusts ratio: 5.2% in 2022.
- Shadow banking exposure via trusts: down to 10% of AUM.
- Fixed income products: 60% of collective trusts.
- Fund-linked trusts: RMB 800 billion in 2022.
- Derivatives in trusts: minimal at RMB 50 billion.
- PE/VC trusts: RMB 300 billion committed capital.
- Charitable trusts products: 1,200 plans, RMB 200 billion.
- Family trusts: 500 plans, RMB 150 billion AUM 2022.
- H1 2023 new products skewed to infra at 40%.
Investment Distribution and Products Interpretation
China’s trust industry, while cautiously retreating from its once-favored property sector and shadow banking, now appears to be playing a high-stakes game of financial Tetris, desperately trying to stack safer infrastructure and government projects atop a still-wobbly foundation of local government debt and lingering real estate risks.
Number of Trust Companies and Market Structure
- Number of licensed trust companies in China stood at 68 as of end-2022.
- China International Trust ranked #1 by AUM with RMB 1.49 trillion in 2022.
- Sichuan Trust was revoked license in 2022, reducing active firms to 67.
- Top 20 trust companies held 65% market share by AUM in 2022.
- 42 trust companies reported net profits in 2022, 26 incurred losses.
- Market concentration ratio (CR5) for trust industry reached 32% in 2022.
- New trust company licenses issued: 0 since 2016 moratorium.
- Shanxi Trust suspended operations in 2022, impacting 68 firms count.
- State-owned trusts comprise 55% of the 68 companies.
- Private trust companies number 22 out of 68 in 2022.
- Foreign-invested trust firms: 3 active as of 2023.
- Trust company branches totaled 1,200 nationwide in 2022.
- Beijing hosts 12 trust company HQs, most in China.
- Guangdong province has 10 trust companies.
- Industry's Herfindahl-Hirschman Index (HHI) at 450, indicating moderate concentration.
- 15 trusts exited via mergers or closures 2018-2022.
- CR10 market share by AUM: 42.5% in 2022.
- SinoPac Trust entered top 50 with AUM growth to RMB 150 billion.
- 68 trusts managed 21,300 single-purpose plans in 2022.
- Average AUM per trust company: RMB 302 billion in 2022.
- Shanghai Trust revoked, firms down to 67 by mid-2023.
- Northeast region has only 4 trust companies.
- Central region trusts: 18 companies.
- Western region: 15 trusts.
- Eastern region dominance: 31 trusts.
- Industry profit share by top 10 firms: 70% in 2022.
- Number of newly established trusts in 2022: 12,500 plans.
- Trust company employees totaled 45,000 in 2022.
- Average employees per trust: 660 in 2022.
- 2023: 66 active licensed trusts after revocations.
Number of Trust Companies and Market Structure Interpretation
China's trust industry is an elite, state-dominated club of 68 where the top players profit handsomely, the bottom third struggle to survive, and everyone is keenly aware that their membership can be revoked at any moment.
Profitability and Financial Performance
- Total net profits of China's trust industry fell 62% to RMB 129 billion in 2022.
- Average ROE for trust companies dropped to 1.8% in 2022 from 5.2% in 2021.
- Net profit margin declined to 0.63% in 2022.
- China International Trust's 2022 profit: RMB 12.5 billion, down 40%.
- Industry net fee and commission income: RMB 205 billion in 2022, down 18%.
- Cost-income ratio rose to 65.4% in 2022.
- 26 loss-making trusts reported RMB 45 billion aggregate losses in 2022.
- Top 10 trusts' combined profits: RMB 95 billion, 74% of industry total.
- Investment income fell 25% to RMB 150 billion in 2022.
- Operating expenses up 10% to RMB 130 billion amid compliance costs.
- Pre-provision profit declined 55% YoY in 2022.
- Credit impairment losses: RMB 80 billion in 2022.
- Shanxi Trust reported RMB 50 billion loss in 2022.
- Industry ROA averaged 0.3% in 2022.
- H1 2023 profits estimated down another 20%.
- Trust fee rates averaged 1.2% of AUM in 2022.
- Non-interest income ratio: 85% of total revenue in 2022.
- Capital adequacy ratio averaged 12.5% but profitability strained.
- 2021 profits peaked at RMB 340 billion before sharp drop.
- Provisions for risks surged 40% to RMB 100 billion in 2022.
- Net interest margin compressed to 1.1% in 2022.
- Administrative expenses ratio: 0.55% of AUM.
- Top performer: GF Trust with 8% ROE in 2022.
- Bottom quartile trusts had negative ROE averaging -2.5%.
- Revenue per employee: RMB 4.5 million in 2022.
- Profit before tax: RMB 180 billion industry-wide 2022.
- Tax rate on trusts averaged 25% in 2022.
- EBITDA margin: 2.1% for sector in 2022.
- 42 profitable firms averaged RMB 3.1 billion profit each.
- Q4 2022 quarterly profit: RMB 25 billion, lowest in decade.
- 2023 projected industry profit: RMB 100 billion.
Profitability and Financial Performance Interpretation
China's trust industry, once a profit powerhouse, appears to have tripped over its own red tape, shedding nearly two-thirds of its earnings as rising costs, mounting losses, and stricter compliance squeezed margins to the point of transparency.
Regulatory and Risk Metrics
- Non-performing asset ratio in trusts rose to 1.95% in 2022.
- Property trust NPL ratio hit 6.8% end-2022.
- Trust compensation plans executed: RMB 1.2 trillion since 2018.
- 2022 regulatory violations by trusts: 150 cases fined RMB 500 million.
- Capital adequacy ratio minimum enforced at 10.5%, average 12.8% 2022.
- Liquidity coverage ratio for trusts: 120% average.
- Shanxi Trust defaulted products: RMB 40 billion investor claims.
- CBIRC revoked 4 trust licenses in 2022.
- New "Trust Law" amendments emphasized investor protection in 2023.
- Channel business banned, reducing risks by 70% since 2018.
- Risk-weighted assets ratio: 85% compliance in 2022.
- Investor compensation fund: RMB 20 billion reserve 2022.
- LGFV trust exposure capped at 20% of AUM per firm.
- Stress test pass rate: 92% of trusts in 2022.
- Fine for illegal fundraising: RMB 300 million on 10 firms.
- Net stable funding ratio: 105% industry average.
- 2018 "No 42" notice reduced high-risk products by 50%.
- NPL provisions coverage: 120% required, average 150%.
- 2023 NFRA took over from CBIRC, tightening oversight.
- Cease-and-desist orders: 25 trusts in 2022.
- Leverage ratio max 5:1, industry average 3.2:1.
- Early warning firms: 15 under special management 2022.
- Risk resolution fund usage: RMB 5 billion for defaults.
- Compliance violation rate down to 2% from 10% in 2016.
- AML fines on trusts: RMB 100 million in 2022.
- Connected party transactions capped at 20% AUM.
- Annual audits required for all 68 firms, 100% compliance.
- Systemic risk indicators: 3 trusts flagged high-risk.
- Investor education programs reached 1 million in 2022.
- Data reporting accuracy: 98% to CTA in 2022.
- 2022 default rate on products: 0.5% of scale.
- Enhanced due diligence on property trusts mandated.
Regulatory and Risk Metrics Interpretation
Despite a worryingly high 6.8% property trust NPL ratio and RMB 40 billion in investor claims at Shanxi Trust, the industry's increased capital buffers, RMB 20 billion compensation fund, stricter regulations, and a flurry of fines and revocations suggest regulators are finally trying to build a trust sector you can actually trust.