Regulations On Foreign Banks to be Relaxed?
China Daily reports that the China Banking Regulatory Commission (CBRC) and the Ministry of Commerce are having second thoughts about the tough regulations they set for foreign banks entering the Chinese market.
According to the terms of the country’s accession to the WTO, China is obliged to open the banking sector to foreign institutions by the end of this year. But in June, the domestic regulators surprised everyone, none moreso than the foreign banks, by slapping a host of new limitations on foreign financial institutions entering China. The proposal that caused most upset stipulated that foreign banks could only accept single local deposits of a minimum of a million yuan, which would in effect force them out of most of the market.
Since then, the overseas banks have been kicking up an almighty ruckus and crying foul and it now appears that the Chinese authorities have been paying attention. The China Daily article states that bickering between the CBRC - who are more interested in protecting the domestic players than welcoming the outside banks - and the Ministry of Commerce - who are concerned about WTO compliance - may see the idea shelved or changed.
For the reason why there has been such an outcry from the foreign players about this, see this story and this one. China has the highest rate of personal savings in the world, estimated at almost 50% (compared with 10% in the USA). Yet, surprisingly, it seems that even as Chinese people get richer, increased interest rates are encouraging them to save more rather than spend more. China Daily reports on the results of a nationwide survey of 20,000 people, which found that the number of people who believe "saving is a better option than spending" has risen 2.2 percentage points in the last quarter alone.
The market potential is simply enormous. No wonder the bankers were so mad.
China is an emerging market, no one can dispute that. This is the reason that U.S. Treasury Sec. Hank Paulson is headed to China with a trade delegation team to spark trade and currency talks with the Chinese Government.
At this point is taking baby steps to prevent itself from growing at a more rapid pace than they are ready for. Paulson is bringing some muscle with him to China, from his cabinet members to key players from major U.S. corporations.
The goal is to spark business between the U.S. and China, but focusing on the major U.S. Corporations and not the small to middle market U.S. companies.
NAMC Worldwide has just opened up offices in Beijing China to bridge the gap between small to middle market companies in the United States and China.
This bridge is necessary for such companies because the spotlight is on U.S. major corporations, which means that they will reap the rewards from increased business in China, the smaller companies firstly do not have the inroads in China to build strong ties and its a difficult thing to develop.
So will business grow between the U.S. and China? this is no doubt but NAMC is making sure that smaller players are not left out of the equation.
Trade Delegations as well as business conferences that focus on small and middle market U.S. companies building strong relationships in China.
We believe that this will be instrumental in additional business between China and the U.S. being done and trade relations growing.
I welcome feedback from U.S. companies on this topic, either here or you can visit www.namcworldwide.com for additional information.
Steve Burke
NAMC Worldwide
Comment by Steve Burke — December 9, 2006 @ 2:02 am