In the news: China opens up to Visa and MasterCard, CNR and CSR discuss merger and Xi calls for FTZ expansion

China eases grip on foreign credit cards

China is taking a step to ease its monopoly over the handling of credit card payments and allow foreign companies such as Visa, MasterCard, American Express and other electronic payment processors to build their presence in the country. Qualified domestic and foreign companies can apply to set up bank card-clearing operations (payment settling between banks and vendors), the State Council said, as a move to further open up China's financial sector. At present state-owned China UnionPay has a monopoly on processing and clearing renminbi-denominated payments made by cards.

Source:
The Wall Street Journal

The State Council's statement, however, did not provide any timelines or further details on the speed and scope of China's opening up of its credit card market. It also did not disclose terms of acceptance such as required licences for US companies like Visa, MasterCard and American Express, all of which have been fighting for business in China for years. While overseas institutions accept the positive signals, they will be sceptical until there is proof of implementation.

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CNR and CSR discuss merger

China's top train manufacturers CNR and CSR Corp are engaged in merger talks to enhance their global standing along the likes of Germany's Siemens and Canada's Bombardier. The two state-owned companies have been fiercely competing with one another while trying to sell trains abroad, impeding the country's plans to export its high-speed train technology. CNR has said the merger “has become a national strategy, to be determined by the government,” and that “mergers are the trend”.

Source:
Reuters

Analysts have said the merger was aimed at reducing unhealthy competition between the two leaders and to promote the country's high-speed rail products abroad, as most developed countries do not have two competing railway makers. Price wars between the two have ensued in the past – in 2011 they battled for a Turkish contract which eventually went to a South Korean firm and had a dispute over supplying to Argentina in 2013.

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President Xi urges FTZ expansion

Xi Jinping has called for expanding the Shanghai Free Trade Zone pilot scheme to other parts of China during the party's address for overall reform. The remarks followed reports from last weekend that ministry regulators have endorsed the setup of an FTZ in Tianjin and were awaiting the State Council's approval.

Source:
South China Morning Post

The Shanghai FTZ launched in September last year, but doubts remain about whether there is substance behind the hype. While the aim was to develop an experimental ground for freer economic conditions and relaxed restrictions for foreign investors, the Shanghai FTZ has been losing its appeal as businesses didn't see the substantial financial and legal liberalisation they were expecting. For instance, the zone had opened up to foreign-owned hospitals last year, and before trailblazers Artemed Group and Silver Mountain Capital could see their investment through, pilot schemes for foreign-invested hospitals were rolled out in more areas of the country. However, rules still remain unclear. This pilot has to first exhibit concrete potential for foreign businesses before any new zones can be established.

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