Growth Party
China’s twice a decade political shebang kicked off in Beijing yesterday with pledges and promises aplenty as the ruling Communist Party took stock of five years of extraordinary growth for the country.
A vast array of issues were touched upon by Chinese President Hu Jintao, including financial services reform.
Hu pledged to make the potentially highly lucrative Chinese banking, securities and insurance industries more competitive, without going into too much detail as to how it would work.
In a translation of a speech given to delegates, Hu said ‘China would proceed with financial reform to develop various tiers of financial markets and build a modern financial system that is inclusive of different forms of ownership and different ways of operation’.
This suggests the door could become more open, or at least ajar, for foreign financial institutions seeking more than the crumbs that have been apparent since the end of 2006 when China’s banking system was officially ‘opened’ to outsiders.
Foreign banks are not allowed to hold more than 19.9% of any bank inside China.
Having said that, the recent flood of previously Government owned Chinese financial institutions listing publicly in Shanghai and Hong Kong still have huge stock allocations held by the Chinese Government, making it hard to acquire large stakes through the open market still.
The president also proposed to improve the structure of China’s capital markets and raise the proportion of direct financing through multiple channels.
Despite an official inflation rate of 6.5% (some pundits place it at around 10%), the plans to grow per capita GDP fourfold by 2020 will certainly prove China to continue to be a place of strong growth opportunities and therefore increasingly attractive to foreign financial institutions.
“We will quadruple the per capita GDP of the year 2000 by 2020 through optimizing the economic structure and improving economic returns while reducing consumption of resources and protecting the environment,” he said.
Per capita GDP is now more than US$2,000 in China – up from $800 in 2000.
Renee says:
Internesting article on china