In China we trust

A new law on trusts was passed by the People''s Republic of China (PRC) recently. It has raised many an eyebrow, not just in the legal field, but also in the pensions and fund management arena.

China's new law on trusts paves the way for trusts to be used as a legal vehicle for new pension funds. The path will not be smooth if other radical new pension reforms and further amendments to the law itself do not take place says Iain Batty, partner at international law firm, CMS Cameron McKenna.

Trusts are likely to provide the underlying legal basis for certain types of pension funds and for certain investment funds, like unit trusts, says Batty, who has been advising the PRC government on pension reform. Trusts have been popular vehicles primarily in common law countries, like Hong Kong and the UK. Now it is extending to civil...

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