It has been argued that a key factor in the development of competitive advantage is the provision of an environment that encourages employees to be creative. Leaders play a crucial role in cultivating an environment that encourages subordinates to be creative. Based on a survey of 219 managers in privately owned enterprises in China, this study investigates how trust in subordinates in terms of their reliability and their loyalty to the leader is related to leaders encouraging subordinates to be creative. The findings reveal positive relationships between these two types of trust in subordinates and leaders encouraging subordinates to be creative. The findings also reveal that attitude to formalization moderated the relationship between trust in subordinates and encouraging them to be creative.