Curiosity about the multiparty dynamics of a letter of credit arrangement first motivated Xiang Gao as a student to learn more about the field and its legal dimensions. After playing an integral role in shaping Chinese law, Gao as Professor of Law at China University of Political Science & Law (CUPL), now shares his wide-ranging knowledge of trade finance with his students. Here, Gao highlights pivotal moments of his journey coinciding with the growing prominence of LCs and guarantees in China.
Looking back, how did you first come into this business — and what do you think originally drew you to it?
When I first came across letters of credit as a student, I found that it was difficult to remember the roles of the parties involved, which made me feel fascinated with it.
In 1993 when I was working in the Supreme People’s Court of the PRC (SPC) and was allocated a case of LC fraud, there were no law or rules with respect to LCs in China at that time. There was only one reported case. The Summary of a conference of the SPC stated that an LC could not be enjoined when a Chinese bank had accepted the draft involved in the transaction. I was asking why it could not be enjoined if the draft had not been transferred and was still in the hands of the fraudster.
When I was awarded a scholarship in 1995 to do my PhD in UNSW [University of New South Wales] in Australia, I chose LC fraud as my research topic. When I finished my PhD and returned to the SPC, I published the world’s first monograph and series of articles on LC fraud, which have been cited by US and Canadian cases and excerpted in US and UK textbooks. Based upon my PhD studies, I initiated and drafted the Chinese LC Rules which were published in 2005.
I have been doing LC and demand guarantee law almost every day ever since. They are part of life. Most of my publications are focused on LCs and DGs. Since I left the SPC and started teaching in Australia in 2004, trade finance has been one of the most important areas of my teaching. I have been teaching the subject “Special Issues in International Trade and Finance Law”, focusing only on trade finance, and in particular LCs and DGs, at CUPL. I have supervised 147 PhD or LLM students and most of their thesis are in the area of LCs or DGs.
When the Chinese DG rules were drafted by the SPC, I was involved as an expert from the beginning to the end. I have done numerous seminars and lectures for judges, bankers, lawyers, and others over the years in China and abroad. I have served as an expert witness in many court or arbitration cases. I have been a member of the ICC Banking Commission’s Legal Committee since it was founded in October 2013 and am one of the members of the International Commercial Expert Committee of the SPC, advising the SPC on trade finance legal issues.
Professor Gao will join as a panelist at the IIBLP Singapore events in 2026.
Over the course of your career, what has changed most in how you see the industry or your role within it?
Although I am not working in the banking industry, I have found that, whether in courts or banks, more and more people have become familiar with LCs and DGs over the years in China. My role is to try to make the rules to facilitate the business, to train more professionals in the area, and explain the rules to people.
What has kept you engaged in this field over the long term, even as the work and the rules have evolved?
The area is complicated, but fascinating and interesting. I am just fond of it.
My role is to try to make the rules to facilitate the business, to train more professionals in the area, and explain the rules to people.
From your vantage point today, what do you think the industry gets right — and what do you think it still struggles with?
It is an area that is complicated and outside of everybody’s daily life. Therefore, it can be challenging for many people, even for those who have been involved in the area for many years. Especially, varieties of sanctions have made financing trade much more challenging and complicated.
Is there a particular moment, case, deal, or decision that meaningfully shaped how you approach your work now?
For many years, I took for granted that people working in trade finance should be well trained professionals until one day I was surprised to find that some staff members in one of the largest banks were not clear that they got five days for the examination of the documents even if the LC was a payment one!
Since then, I start with the very basics when I am invited to do seminars for the largest banks.
What responsibility do experienced professionals have to the next generation entering trade finance and compliance?
They should tell the next generation to have some systematic training of the very basics, such as the concept of negotiation, the meaning of the principle of independence, rather than just advising them when questions are asked during work.
Fun one to end: What’s the last song you listened to on repeat and where was your most recent vacation?
The last song I listened to on repeat was “Walk Away with Grace” (潇洒走一回). My most recent vacation was in Qingdao, China.
Michael is the CEO of IIBLP and the Publisher of DCW. Michael has over 25 years of professional experience including 15 in trade finance and compliance, and has written and spoken extensively.
