An explanation of ‘extensive asset management’ in China

According to the Report on the Development of China’s Asset Management Industry (2017), the scale of China’s asset management industry has reached RMB110 trillion (US$17.5 trillion). The boundary between different financial business such as banks, securities, insurances, trusts, funds, futures, etc., has been broken progressively, and the financial industry has entered an era of “extensive asset management”.

“Extensive asset management” has become a topic that is being widely discussed in the industry. After all, what does the term mean? The definition of asset management in the Report on China’s Financial Stability (2017) and the Guiding Opinions on Regulating the Asset Management Business of Financial Institutions (Exposure Draft) (the asset management new rules) and some common definitions of extensive asset management in the market and academia all include the following four elements.

First, trustor/investor. Investors may be divided into unspecific public investors and qualified investors and, consequently, asset management may be divided into public placement and private placement. Along with the coming of the era of extensive asset management, the current situation that different asset management products have different qualification standards for investors will be changed, and a unified qualification standard is expected to be established.

Long Haitao is a partner at Merits & Tree Law Offices