In the Chinese context, trust companies are special purpose entities that set up "trusts" to raise funding for specific projects with a limited timespan (e.g. real estate development projects, infrastructure development projects by local governments, CapEx for companies, company mergers and restructurings). The minimum required investment amount to invest in a trust is usually high, so the majority of funding comes from high net worth retail investors and institutional investors. Trusts generally have a lifespan of 18 months to 3 years, during which coupon payments are paid out to investors but no withdrawals are allowed until the completion of the underlying project, after which principal payments are returned.
Since the 2018 banking regulation reforms in China, financial intermediaries were no longer allowed to state that they guarantee a full return of principal. This, combined with historical default rates that could be quite high, led to a decline in popularity of investing in trusts. However, it should be noted that the credit riskiness of trusts can vary significantly depending on the nature of the underlying project and entity(ies) involved.