Beyond the Dichotomy: Recalibrating the Supervision of Charitable Trusts in China

Abstract The post-2023 supervisory framework for charitable trusts in China is commonly described as a hybrid system balancing regulation and autonomy. This article argues that such a characterisation understates a deeper structural problem. Rather than being merely imbalanced, the framework is fundamentally schizophrenic: the state’s continued adherence to a regulatory approach that reflects a rigid public-private dichotomy has produced a system simultaneously over-regulatory and under-regulatory, suppressing innovation through intensified external control while generating governance disorder because oversight within the trust itself, by settlors, trustees, and trust supervisors, is neglected. The 2023 Charity Law amendments reinforce this contradiction by expanding regulatory powers and imposing rigid percentage caps on annual expenditure and management fees of charitable trusts, even as core accountability mechanisms remain underdeveloped following the removal of the mandatory trust supervisor required under the Trust Law for public welfare trusts. These paradoxes are twin symptoms of the same conceptual misalignment − the transplantation of a public-law command model into a domain that blends public objectives with private initiative. Tracing these paradoxes to the persistence of a rigid public-private dichotomy in regulatory design and selective legal borrowing from Japan and Taiwan, this article reconceptualises supervision as a problem of institutional design rather than regulatory intensity. Resolving the impasse requires shifting the state’s role from a substantive controller to an institutional enabler: strengthening fiduciary order while moderating rigid external intervention. Such a transformation would unlock the governance potential of charitable trusts in advancing China’s ‘third distribution’ and common prosperity.