On the evening of July 15, the National Financial Regulatory Administration formally released the "Interim Administrative Measures for the Supervision of Local Asset Management Companies" (Regulation [2025] No. 16), marking a new phase of standardized and transparent development for China's local asset management companies (AMCs).

China's AMC system comprises two main categories: national financial asset management companies (such as China Orient, China Cinda, and China Great Wall) and local AMCs. As pivotal players in regional financial risk resolution, local AMCs have actively addressed non-performing assets and supported the real economy since their inception. However, rapid industry growth has exposed issues including deviation from core operations, reckless expansion, and risk accumulation, necessitating unified regulatory standards.

The newly implemented Measures contain four chapters and 45 articles covering general provisions, business operations, risk management, supervision, and supplementary rules. They clearly define permitted activities while establishing operational boundaries through negative lists, providing institutional safeguards for healthy industry development. Notably, the regulatory framework has been significantly upgraded—previously based on departmental guidelines, the Measures now carry the force of ministerial regulations, enhancing enforcement capabilities and legal binding power.

A core aspect of the Measures is defining business scopes to refocus local AMCs on non-performing asset management. Article 7 permits seven activities, including acquiring, managing, and disposing of distressed assets; acting as bankruptcy administrators; conducting market-based debt-to-equity swaps; and making additional investments in held assets. These emphasize regulators' directive for local AMCs to "specialize in core functions and serve regional needs."

Conversely, five prohibited practices form a negative list: guaranteeing principal or fixed returns; helping financial institutions disguise non-performing assets; acquiring fictitious assets; facilitating hidden local government debt; and abetting debt evasion. To reinforce core operations, the Measures mandate that financial non-performing asset investments must comprise at least 30% of new investments annually over three years—a binding metric redirecting resources to primary business lines.

Risk management provisions establish multi-layered controls. Concentration limits cap single-client exposure at 10% of net assets and single-group exposure at 15%. Liquidity requirements mimic banking standards, demanding high-quality assets covering 30-day net outflows. Related-party transactions cannot exceed 50% of quarterly net assets, while a leverage ceiling of three times net assets prevents overexpansion.

Geographically, local AMCs must primarily operate within provincial boundaries, with exceptions like bulk purchases of individual non-performing assets. Asset recovery must follow legal protocols, prohibiting violence, harassment, deception, or unlawful information disclosure. Seven specific collection practices are banned. Crucially, the Measures bar local AMCs from enabling new hidden debts for local government financing vehicles, aligning with central debt-risk policies.

A "central guidance, local responsibility" framework assigns primary supervisory duties to provincial financial authorities, with the National Financial Regulatory Administration coordinating oversight. Industry experts recognize the Measures as a milestone that will optimize the sector's structure, enhance professionalism, and amplify its role in containing regional financial risks amid emerging opportunities and challenges.