What Opportunities do Foreign Banks Have in China?

March 31, 2002 | BY

clpstaff &clp articles

A detailed explanation of the importance of the new rules governing financial services in China.

By Carmen Kan,Consultant, Clifford Chance, Hong Kongand Stephen Harder,Partner, Clifford Chance, Shanghai

How well are foreign-funded financial institutions (FFIs) doing in China? According to the figures of the People's Bank of China (PBOC), there were approximately 190 FFIs in China as at the end of September 2001, with aggregate total assets of approximately US$44 billion. As at the end of October 2001, 32 foreign banks had been granted licences to conduct renminbi (Rmb) businesses in Shanghai and Shenzhen. From the publicly available data, FFIs reportedly earned a collective net income of US$7 million in 2000. Not surprisingly, this figure was quite widely regarded as a rather significant improvement over the 1999 performance when FFIs collectively incurred a net loss of approximately US$150 million. Simply looking at these figures, one may wonder why FFIs are still flocking to China. It goes without saying that the size of China's banking and financial services market, coupled with the expected rate of growth of China's economy and further opening of the banking and financial sectors under China's WTO commitments has attracted considerable international interest.

Implementing WTO Commitments

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