Unlike other major financial markets, Mainland China is home to many mixed conglomerates that control a range of large financial and non-financial firms. In a new research article published in the University of Pennsylvania Journal of International Law, Patomak’s Robert Greene examines the origins, market presence, and regulation of these financial-commercial conglomerates (FCCs) with co-authors Xian Wang, Associate Dean at the National Institute of Financial Research at Tsinghua University’s People’s Bank of China School of Finance (PBCSF), and Yan Yan, a Senior Research Fellow at the PBCSF.

An underexplored topic of research, Mainland China’s FCCs are mostly not subject to group-wide regulation. The article finds that due to complex ownership structures brought about, in part, by legal ambiguity, and potential risks these entities pose to financial markets can be unclear to regulators. For example, in 2019, issues at one FCC-controlled bank ultimately sparked market-wide distress. Greene, Wang, and Yan estimate that FCC-controlled companies accounted for thirteen to nineteen percent of Mainland China’s commercial banking assets, over one-third of its life insurance policies written, and about thirty percent of assets held by its trust and investment companies (a type of institutional investment vehicle). Their article also contrasts the structure and regulation of Chinese FCCs with state-owned and private companies in the EU, Japan, and the United States.

Download a pdf of the paper, “Conglomeration Unbound: The Origins and Globally Unparalleled Structures of Multi-sector Chinese Corporate Groups Controlling Large Financial Companies”