China is committed to opening up its banking sector to international providers of financial services because of its WTO membership. Stipulations on foreign access to the local Chinese market--including the provision of renminbi accounts--came into effect late last year. However, the government has made foreign banks jump through many hoops to obtain licenses as the competitiveness of Chinese banks--particularly state-controlled banks (SCBs)--remains questionable. With their high levels of non-performing loans that the government has spent a reported $400 billion to bail out since 1998, forced purchases of low-yielding sterilization bills to keep inflation in check, and forced purchases of foreign assets so official reserves do not appear so mind-bogglingly huge, these banks bear the brunt of state interference.Oxford Analytica has just catalogued some eye-popping hoops that a foreign bank must go through to operate in China:
- minimum registered capital of 1 billion renminbi ($129.2M) and allocation of 100 million renminbi ($12.9M) to each branch it opens to obtain national treatment;
- having total assets of over $10 billion, while a foreign bank that seeks to open a branch has to have total assets of over $20 billion;
- foreign branch banks can only take time deposits above 1 million renminbi ($129,200) from Chinese citizens if not locally incorporated;
- numerous provisions allow the China Banking Regulatory Commission (CBRC) to slow or even stop the expansion of foreign banks at any time.
