BIZCHINA / Finance
Foreign Investment
Updated: 2006-04-21 13:51
Introduction to Foreign Investment in the Banking Industry
Foreign banks usually set up their branches in China -- initially from
special economic zones to coastal areas and then to provincial capital
cities, as well as major economic cities in inland areas. This kind of
distribution is consistent with the country's opening-up initiatives.
Currently, there are more than 30 cities that are permitted to establish
operational foreign institutions, among which foreign financial
institutions are concentrated in Beijing, Shanghai, Guangzhou, Dalian,
Shenzhen, Tianjin and Xiamen. The Japanese Bank took the initial step by
setting up the first representative office of foreign financial
institutions in China in 1979.
Since then, Chinese banks began taking advantage of foreign investment.
In 1982 the Hongkong Nanyang Commercial Bank established its first
foreign branch in Shenzhen. Xiamen International Bank, the first
Sino-foreign joint venture (JV) bank was set up in 1985. With a rapid
increase of foreign investment in China since the 1990s, more and more
foreign financial institutions have entered the Chinese market.
Between 1995 and 1996, 30 foreign banks -- one Sino-foreign JV bank, as
well as representative offices of more than 140 foreign financial
institutions -- have been authorized to start business in China. In
recent years, the Chinese financial market has opened up quickly and the
foreign exchange reserve has also increased.
By the end of June 2000 the total assets of all foreign banks in China
reached US$32.3 billion. Thirty-two foreign banks have been given the
green light to operate financial businesses in Shanghai and Shenzhen,
with clients from as far as Jiangsu, Zhejiang, Guangdong, Guangxi and
Hunan.
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