Xiao Ying Advocates for Value Reconstruction and Long-Term Growth in the Sector
In a recent exclusive interview with the Shanghai Securities News, Xiao Ying, Chairman of National Trust, emphasized that the trust industry must “summon the courage to leave its comfort zone.” As China’s 14th Five-Year Plan advances and financial supply-side structural reforms deepen, the sector is undergoing a critical transition from scale expansion to value reconstruction.
Xiao believes the trust industry must differentiate itself from securities firms, wealth management subsidiaries, funds, and insurance by revitalizing its unique cultural ethos and reinforcing the core principles of fiduciary responsibility. Only then can it create long-term value for clients and beneficiaries.
Embracing Long-Term Value Through Fiduciary Duty
As key institutional investors, financing service providers, and innovators in capital markets, trust companies have historically relied too heavily on license advantages, developing what Xiao calls a “scale worship” mentality and a “fast money” obsession. This propelled trusts to become China’s second-largest financial sector, but at a cost.
“This prosperity, divorced from the essence of trust, was like a castle in the air—unsustainable and risk-laden,” Xiao observed. Since regulators began urging trusts to “return to their origins” through policies like the 2023 Three-Category Classification system, the industry has been pushed to leverage its inherent strengths in risk isolation and family wealth succession while moving beyond shadow banking models.
In 2019, National Trust launched its “Reform, Transformation, Development” initiative, restructuring its business around bankruptcy restructuring trusts, family trusts, and inclusive finance while fostering a corporate culture centered on true fiduciary duty—”accepting entrustment and serving loyalty.”
Pioneering Bankruptcy Restructuring: A Social Responsibility Model
Seven years into post-regulatory reforms, Xiao notes that homogenized competition remains the industry’s central challenge. He argues trusts must capitalize on their legal capacity for risk isolation, cross-market asset allocation, and customized services to develop irreplicable specialties.
“Financial institutions participating in corporate bankruptcy restructuring fulfill social responsibilities by leveraging their expertise to reorganize resources,” said Xiao. As an early mover in bankruptcy service trusts, National Trust has charted a difficult but purposeful path.
While these projects yield lower returns than traditional business, Xiao finds validation when trust plans revive struggling enterprises, stabilize regional economies, and repair industrial/social value. “We prove private trusts can undertake unglamorous work, endure hardships, and shoulder social duties,” he stated.
Redefining Industry Value Through Differentiation
Following the January 2024 regulatory guidelines on trust industry high-quality development, Xiao stresses that balancing professional capability with cultural transformation is key to navigating complexity. The sector must correct the public misconception that “trusts equal wealth products” by highlighting their broader roles in asset management, financial support, and legal protection.
Future development, he suggests, will revolve around service-oriented customization—potentially shifting trusts from capital-intensive to service-intensive operations. This requires abandoning traditional channel financing mentalities and embracing the Three-Category framework’s specialized divisions.
“Only by reclaiming China’s indigenous fiduciary spirit can trusts find their place in building a financial powerhouse and contribute meaningfully to high-quality economic development,” Xiao concluded.
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