:::::::::: 글로벌번역통역센터 ::::::::::

> 고객지원센터 > News & Notice
ADMIN 2019. 01. 22.  
   제목: China's Financial Opening Isn't Quite What It Seems

China's Financial Opening Isn't Quite What It Seems

Local banks are now so dominant that safeguards are largely irrelevant.

by Andrew Polk

April 4, 2018

Although trade tensions between the U.S. and China show no signs of abating, there are some reasons for cautious optimism. One is that the Americans have finally gotten around to giving the Chinese a concrete list of demands -- and, on at least one score, China is prepared to deal.

The Chinese financial market has long been closed to foreign ownership, despite widespread criticism from the U.S. and others. In November, following Donald Trump's state visit to Beijing, China's finance ministry announced that this was set to change in 2018, and now the Trump team is pushing China to make good on that promise.

The catch, of course, is that the practical impact of this opening will be minimal -- and for China, that's the point. It will accelerate its financial opening not because the Americans are demanding it, but because foreign financial firms no longer pose much of a threat. Chinese banks are now too big and too dominant domestically for foreign financial institutions to genuinely compete with them.

Consider that the four largest banks in the world are all Chinese state-owned institutions. Together they have $11.9 trillion in assets. The world's next five biggest banks roughly match up to China's Big Four, accounting for $11.8 trillion, but they represent the largest institutions in four separate countries -- Japan, the U.S., the U.K. and France. No single country has financial firepower on China's scale. Just taking America's banking sector -- where the concept of "too big to fail" originated -- it would require the combined balance sheets of the top 10 lenders to equal the assets of just China's top four.

Within China, foreign firms own slightly more than 1 percent of total bank assets, compared to a full 36 percent owned by the five major state-owned institutions. Similarly, foreign banks account for less than 1 percent of annual earnings, or the equivalent of about 5 percent of the yearly profit made by just the Industrial & Commercial Bank of China. Starting from such a minuscule base, and up against such huge incumbents, foreign banks will always be relegated to the minor leagues in China, whether market restrictions are eased or not.

And it’s not just size that gives Chinese banks an advantage. They also benefit from a well-oiled industrial policy. "Buy China" stipulations apply to projects of any significant magnitude, foreign or domestic, and include purchases of financial services. Such requirements generally aren't written into formal policy documents, because they don't have to be -- everyone involved understands them. Cross-shareholding arrangements between state-owned financial institutions and the companies whose projects they finance help reinforce these requirements. Increasingly, China is even exporting this model through its Belt and Road initiative.

A final disadvantage for foreign firms concerns data management. Chinese regulators are finalizing the details of a new cybersecurity law that will cover cross-border data flows, protections for personal information, and other sensitive issues. It's aimed at protecting China's "critical information infrastructure," of which finance has been deemed a part, and will make handling certain kinds of data far more onerous. Foreign financial institutions will almost certainly face more restrictive rules than domestic ones.

In short, China is set to make significant strides toward improving market access in finance -- but only in areas where Chinese firms already have insurmountable advantages.

The same approach applies to payment systems. China allowed Apple Pay into its market 2016, but only after WeChat and Alipay had achieved complete dominance in the mobile-payments space and Apple Inc. had agreed to partner with the state-owed payments system Union Pay. Visa Inc. and Mastercard Inc. were officially given access the same year, but regulatory delays meant that they weren't able to apply for operating licenses until late 2017 and pending compliance and security reviews mean that they probably won't be up and running before late 2019. Meanwhile, Union Pay has become the largest card company in the world by transaction volume.

Back in November, China's announcement that it was planning to scrap limits on foreign ownership of its banks was met with much caution and skepticism. But we should take Chinese officials at their word on this one: They really do plan to move forward. That's because such caps are no longer needed to safeguard China's interests, and if removing them helps to diffuse a trade war, then all the better.

Selected articles from Bloomberg

전체글 목록 2019. 01. 22.  전체글: 711  방문수: 2218345
 공지  정규직,계약직,프리랜서직 모집 
711   Tesla to Cut 3,000 Jobs in Bid to Sell Model 3 to Mass Market 
710   Paramount Was Hollywood's Mountain. Now It's a Molehill
709   In the Bond Market, the Economy Is Still Something to Worry About
708   Ford and Volkswagen are about to make cars for each other
707   Why 2019 is shaping up to be a stellar year for space exploration
706   Australia’s Housing-Sector Slump Shows Up in Another Sickly Set of Data
705   Carlos Ghosn Comes Down With Fever in Jail, Halting Interrogation
704   Stocks Rally on Trade Progress as Dollar Slips: Markets Wrap
703   Rupiah Will Beat Rupee in Battle of High-Yielders, Goldman Says
702   Singapore's Lee Family Feud Re-Emerges With Latest Facebook Post
701   Philippine Stocks Are the World's Best Performers Right Now
700   Apple Isn't the Only Casualty of China's Slowdown
699   Here's (Almost) Everything Wall Street Expects in 2019
698   In 2018, Did Business Get Too Big?
697   U.S. markets close in positive territory after challenging day
696   Internet billionaire Reid Hoffman apologizes for funding a group tied to disinformation in Alabama r
695   Musician-turned-businesswoman engages in 'economic diplomacy'
694   BMW Faces Criminal Probe in South Korea Over Engine Fires
693   LG CNS 4th in AI image recognition competition
692   Oil Sinks to One-Year Low as Equity Slump Adds to Supply Fears
691   Central bank joins wage worries
690   Convertible laptops attracting consumer interest in Korea
689   OPEC Agrees to Larger-Than-Expected Output Cut With Allies, Delegates Say
688   The Biggest Political Risks to the World Economy in 2019
687   Stocks Decline Before G-20; Treasuries Edge Higher: Markets Wrap
686   What Oil at $50 a Barrel Means for the World Economy
685   Lion Air Crash Report Due Next Week, Boeing 737 Max in Focus
684   Goldman Says It's Time for Equity Investors to Boost Their Cash
683   Citigroup Sees U.S. Dollar Topping Out in 2019
682   Asia Stocks Drop as Oil Seeks Floor; Pound Rises: Markets Wrap
1 [2] [3] [4] [5] [6] [7] [8] [9] [10] [11] [12] [13] [14] [15] [16] [17] [18] [19] [20] 24