Leasing in China: An Overview

Abstract

While it might have already been mature in developed economies, the leasing industry is still emerging and rising in China. The Chinese leasing market witnessed a double-digit growth in the last decade and still has potential to sustain this rapid growth in the next decade or beyond. This article aims to provide an overview of this ever-growing Chinese market, covering the leasing history, the importance to the Chinese economy and its on-going economic transition, and a comprehensive introduction to the recent market structure, performance, and legal infrastructures of the leasing industry. It is our view that although it has experienced a dramatic growth period, the Chinese leasing market still has a huge potential in that its market penetration ratio is still at a very low level, less than 5%. The article ends with a discussion of the opportunities and challenges for this market. Despite these challenges, the Chinese leasing industry is stepping into its golden era, as encouraged by the Chinese governments at both central and provincial level, to an unprecedented extent, together with the establishment of a corporate credit information system.

Keywords:

• China
• financial leasing
• leasing
• market review

Notes

According to World Leasing Yearbook 2014, the U.S. leasing market penetration was around 30% from 1993 to 2007, but decreased sharply in 2008 because of the financial crisis. Its market penetration recovered to 22% in 2012 and hopefully will continue to recover in the following years.

Upon issuance of Notice of the Ministry of Commerce and the State Administration of Taxation on Relevant Issues Concerning Leasing Business on October 22, 2004.

Upon effectuation of Administrative Measures on Leasing Companies as Non-Bank Financial Institutions by China Banking Regulatory Commission on March 1, 2007, and these measures were amended on March 13, 2014, to adapt to the rapid changes that occurred in the market.

Upon effectuation of Administrative Measures on Foreign Investment in the Leasing Industry on March 5, 2005.

Data comes from the Ministry of Commerce and China Banking Regulatory Committee.

The pilot lessors can only be licensed among existing enterprises having relevant businesses.

GUOFA [2014] No. 26.