Breaking the Path Dependency and Reconstructing the Investment in Non-Performing Assets in China: A Perspective of Financial Asset Management Companies

Financial Asset Management Companies (AMCs) play a pivotal role in China's economic development, serving as agents of "revitalization and recovery" and "assistance in crisis." Since the establishment of the four major state-owned AMCs, and with the China National Financial Regulatory Authority approving the creation of "Galaxy Asset" in 2020, the total number of state-owned AMCs has grown to five. After more than two decades of development, these institutions now face unprecedented challenges. Confronted with the complexities of the non-performing asset (NPA) market, the critical question is how these AMCs can fulfill their mandate to rescue market entities while ensuring their own operational security. This study reviews the historical evolution of AMCs and analyzes the current market conditions, arguing that the five state-owned AMCs should leverage their unique roles and identities to contribute differently to the NPA market. By doing so, they can ensure market order and stability while achieving sustainable and healthy development.