Foreign Banks in China: Start of a New Stage

Abstract

Received 16.10.2020. The article examines the most recent developments in the evolution of the foreign banks in China. Author provides a brief description of the stages of development of foreign banks in the PRC since the start of the Den Xiaopin’s Reform and Development policy till the present time. The change in assets of foreign banks for the last 15 years is analyzed in details. A comparison of assets of foreign banks with the assets of the China banking system is provided in a form of analytical graph. The author’s assessments of the foreign banking sector over the past ten years give grounds to conclude that there was a stagnation in the development of the foreign banks sector during this period. The recent steps of the Chinese authorities to liberalize the foreign banking sector are analyzed in detail. The author examines the Chinese leader’s systematic approach to the banking reforms and comes to the idea that it consists of three components: the change in the political vision and attitudes, the institution reform of the banking regulators and the reform of banking legislation. An assessment of the impact of liberalization on the development prospects of foreign capital banks is also given. Based on an analysis of the overall scale and impact of recent reforms in the foreign banking sector, the author concludes that a new stage in the development of foreign capital banks in China is likely to begin. The main problems and challenges that foreign banks in China will have to face at a new stage of development are also identified and described.