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Financial Reform: Marathon or Sprint?
Chinese bankers would no doubt prefer a leisurely period of
transition from policy arms of the state to consumer- and
business-oriented retail outlets. WTO accession means that's not
going to happen. Since the Sino-American market access agreement in
December, mid-size commercial banks such as Everbright – seeing
themselves as prime targets for hungry foreign giants – have been
allying with other financial institutions. A common tactic is to seek
shelter from one of the four main state banks. The problem is that
the state banks can barely help themselves and will sacrifice their
domestic comrades once the heat is turned up.
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The Finance Ministry also prefers piecemeal reform but may not get
its way. It is slow-playing foreign banks on local currency licenses,
with only 16 granted to date. This week, however, Deutsche Bank
raised the stakes by calling the license approval process
discriminatory, a WTO no-no. The Ministry has been dragging its heels
over the nation's horribly mismanaged trusts. It announced this week
that 11 of 14 national trusts will be closed, but this leaves dozens
of essentially bankrupt regional institutions which will collapse on
contact with real competition.
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China
E-Bytes
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| British Petroleum plans an 800-station retail network for Guangdong
at a cost of $500 million. This is the quo for the
$600-million-investment-by-BP-in-PetroChina quid. A similar deal is
being considered by Sinopec and ExxonMobil. |
| A mass of regulations governing behavior of foreign-funded
companies is due at year's end. These will specify greater
participation in mutual funds, new rules on repatriating foreign
exchange, and the anticipated modification of preferential tax
treatment. |
| Someone forgot to hit the censor button and allowed a caller to a
nation-wide radio talk show to say endemic corruption means the
Communist Party should relinquish authority. Time to look for a new
line of work, far, far away. |
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| Keep
up with the fast changing business environment in
China, the world's biggest and fastest-growing emerging
economy. Sinomania! recommends Orbis
Publications, Experts in Emerging Markets, for
a full range of in-depth coverage on China including
daily/weekly/monthly reports and more. |
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