CHINA: CONFRONTING A GROWING WEALTH MANAGEMENT SECTOR

China's fast-growing wealth management market beckons both local and global asset management firms which have raced to strengthen their market share in China. However, the absence of more targeted wealth management laws and regulations, and the weak enforcement of the existing laws, have raised concerns about systemic risk in China's financial sector and investor protection. This chapter reviews the main provisions applicable to wealth management activity in China, particularly financial advisory businesses. It argues that the current sectoral regime remains suitable and adequately responsive to the need for investor protection. More specifically, the use of merit regulation measures remains appropriate given China's large population of unsophisticated retail investors and the emerging nature of the industry. However, as the wealth management market becomes more complex in terms of the financial products on offer, and retail investors need more comprehensive protection, more holistic and extensive provisions along the lines of those seen elsewhere may be needed.