Page 368 - 2019 White Paper on the Business Environment in China
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9 White Paper on the Business Environment in China
2.16 Financial Sector
Background meaning the world’s financial landscape will never be
the same again (Scott and Dormido).
Chinese banks held 254.3 trillion yuan
(US$37 trillion) in assets as of Opening of the Financial Sector
the end of July 2018. The volume marked an increase
of 7.5 percent year on year. The combined onshore China announced in May 2018 that its push to
assets of China’s “big five” lenders—the Industrial and open up its financial sector to foreign banks and
Commercial Bank of China, Agricultural Bank of China, financial institutions would be based on the principle
Bank of China, China Construction Bank, and Bank of of reciprocity and would not reward protectionism by
Communications—came in at 90.4 trillion yuan, 35.5 other countries. Chen Wenhui, the vice-chairman of the
percent of the total assets in the industry. China’s more China Banking and Insurance Regulatory Commission
than 130 city commercial banks, which were founded (CBIRC), claimed the country wants to accelerate the
in 1995 through shareholding reform of urban credit process of opening up, but countries afraid of exposing
cooperatives, recorded 32.5 trillion yuan in total assets, their own financial sectors to competition would not
accounting for 12.8 percent of the industry’s total benefit. Without naming any names, Chen said some
(Xinhua, China Banking). Foreign-backed securities countries have imposed restrictions on the overseas
ventures’ profits are forecast to almost quadruple as expansion of Chinese financial institutions, partly
their share increases fivefold by 2030. UBS has already because their own banks were unable to operate
applied to acquire a majority stake in its Chinese venture, freely in China. “Our country’s opening must be based
becoming the first global bank to take advantage of on the principle of equality and mutual benefit. It will
the latest commitment to open-up. Goldman Sachs — not be carried out on a ‘one-size-fits-all’ basis, and
which has been quietly laying the groundwork for a should stress mutual benefit and reciprocity.” China has
beefed-up onshore business — plans to significantly been put under heightened pressure by the US over
increase both headcount and the amount of capital it access to its markets, and promised to allow foreign
deploys once it can get control. Life insurance is the one investors to enter into trust, financial leasing and auto
corner of China’s vast financial sector where foreign firms and consumer financing by the end of 2018. Opening
have done pretty well, with market share by premiums up the financial sector to foreign firms would improve
advancing for six straight years. The best performers in domestic resource allocation and support the economy,
the years ahead are likely to be those that already have Chen noted, adding that some foreign financial
one foot in the door. As part of the opening measures, institutions had already expressed intentions to set up
China pledged to lift foreign ownership in mutual fund operations in China or buy bigger stakes in their Chinese
management and futures firms to 51 percent by June counterparts. It would also encourage other countries
2018 and remove any limit in three years. Given the to open up their financial sectors to Chinese entities, he
massive investment pool, if foreign firms can squeeze said (Reuters, China Says Opening).
just a 6 percent share by 2030, that would give them
US$1.8 trillion in assets under management. China’s big Banking
financial opening won’t be without risks and setbacks.
The heavy hand of the state will need to recede before A growing number of Chinese commercial banks are
foreigners jump in with confidence. Capital account setting up their own financial technology companies to
opening — with all the volatility that can entail — will explore a market-driven mechanism for development
need to resume so investors know they can get their of the sector. China Minsheng Bank Corp Ltd, a Beijing-
cash out, not just in. Yet in an economy as vast as China, headquartered national joint-stock commercial lender,
even single-digit market shares will offer sizable profits, launched a tech subsidiary called Minsheng Fintech
368
2.16 Financial Sector
Background meaning the world’s financial landscape will never be
the same again (Scott and Dormido).
Chinese banks held 254.3 trillion yuan
(US$37 trillion) in assets as of Opening of the Financial Sector
the end of July 2018. The volume marked an increase
of 7.5 percent year on year. The combined onshore China announced in May 2018 that its push to
assets of China’s “big five” lenders—the Industrial and open up its financial sector to foreign banks and
Commercial Bank of China, Agricultural Bank of China, financial institutions would be based on the principle
Bank of China, China Construction Bank, and Bank of of reciprocity and would not reward protectionism by
Communications—came in at 90.4 trillion yuan, 35.5 other countries. Chen Wenhui, the vice-chairman of the
percent of the total assets in the industry. China’s more China Banking and Insurance Regulatory Commission
than 130 city commercial banks, which were founded (CBIRC), claimed the country wants to accelerate the
in 1995 through shareholding reform of urban credit process of opening up, but countries afraid of exposing
cooperatives, recorded 32.5 trillion yuan in total assets, their own financial sectors to competition would not
accounting for 12.8 percent of the industry’s total benefit. Without naming any names, Chen said some
(Xinhua, China Banking). Foreign-backed securities countries have imposed restrictions on the overseas
ventures’ profits are forecast to almost quadruple as expansion of Chinese financial institutions, partly
their share increases fivefold by 2030. UBS has already because their own banks were unable to operate
applied to acquire a majority stake in its Chinese venture, freely in China. “Our country’s opening must be based
becoming the first global bank to take advantage of on the principle of equality and mutual benefit. It will
the latest commitment to open-up. Goldman Sachs — not be carried out on a ‘one-size-fits-all’ basis, and
which has been quietly laying the groundwork for a should stress mutual benefit and reciprocity.” China has
beefed-up onshore business — plans to significantly been put under heightened pressure by the US over
increase both headcount and the amount of capital it access to its markets, and promised to allow foreign
deploys once it can get control. Life insurance is the one investors to enter into trust, financial leasing and auto
corner of China’s vast financial sector where foreign firms and consumer financing by the end of 2018. Opening
have done pretty well, with market share by premiums up the financial sector to foreign firms would improve
advancing for six straight years. The best performers in domestic resource allocation and support the economy,
the years ahead are likely to be those that already have Chen noted, adding that some foreign financial
one foot in the door. As part of the opening measures, institutions had already expressed intentions to set up
China pledged to lift foreign ownership in mutual fund operations in China or buy bigger stakes in their Chinese
management and futures firms to 51 percent by June counterparts. It would also encourage other countries
2018 and remove any limit in three years. Given the to open up their financial sectors to Chinese entities, he
massive investment pool, if foreign firms can squeeze said (Reuters, China Says Opening).
just a 6 percent share by 2030, that would give them
US$1.8 trillion in assets under management. China’s big Banking
financial opening won’t be without risks and setbacks.
The heavy hand of the state will need to recede before A growing number of Chinese commercial banks are
foreigners jump in with confidence. Capital account setting up their own financial technology companies to
opening — with all the volatility that can entail — will explore a market-driven mechanism for development
need to resume so investors know they can get their of the sector. China Minsheng Bank Corp Ltd, a Beijing-
cash out, not just in. Yet in an economy as vast as China, headquartered national joint-stock commercial lender,
even single-digit market shares will offer sizable profits, launched a tech subsidiary called Minsheng Fintech
368
