China's trust sector is shrinking as a result of the regulatory burdens that the Government is placing upon it, according to the China Trustee Association.

The size of trust assets under management has apparently by 0.7% to 22.54 trillion yuan (about US$3.27 trillion) as at the end of March. There are 68 trustee businesses in the communist state all told.

The association does not go into detail about the regulatory reasons for this latest quarter's decline, but it attributes decline in previous quarters (in the second quarter of last year, for example) to the "deleveraging and controlling of channel business" and the regulation of asset management. It adds: "The continuous and steady fall in the size of trust assets was closely related to [and] partly caused by the introduction of new regulatory policies and enforcement action."

The channel business manifested by single pecuniary trusts was strictly regulated. After promulgation of new regulations for asset management, China's property trusts grew rapidly in number. The regulators are also trying to promote family trusts (to do with inheritance) and charity trusts.

In December 2017, the China Banking Regulatory Commission issued its Notice on Regulating Business Co-operation between Trust Companies and Banks. In 2018, it issued its Notice on Clearing up Chaos in Banking Market, which restricted "channel business" that might lead to regulatory arbitrage, i.e. firms preferring laxly regulated jurisdictions over strictly regulated ones. A series of regulatory policies strengthened the supervision of business cooperation between trust companies and banks, resulting in a loss of momentum in the market. In the first half of 2018 the amounts of money that were the subject of co-operation between trust companies and banks declined continuously.