January 23, 2022

American financial companies invade the Chinese market

Is CHINA becoming the next global FINANCIAL HUB? – VisualPolitik EN

American financial companies invade the Chinese marketAmerican financial companies invade the Chinese market

Major American financial giants such as Citi and BlackRock are delving deeper into the Chinese market, from regulatory approvals to business decisions, although political tensions between the US and China are growing.

Citi announced Wednesday that it has received an internal custodian license from the China Securities Regulatory Commission, becoming the first U.S. bank and the first of the world’s five largest custodians to do so..

The license will allow Citi to hold securities and sell related custody services to Chinese mutual funds and private funds if Citi passes a regulatory review later this year, the bank said in a press release..

«We have invested heavily in our Shanghai securities operations and plan to continue to build up our local capacity to meet the growing demand of our clients in China, such as fund administration and other outsourcing services.», – stated David russell, Head of Securities Operations at Citi Asia Pacific.

Over the past two years, the Chinese government has stepped up efforts to expand foreign access to its previously closed financial market. Easing restrictions on the ownership and granting of business licenses to US financial institutions are also part of the first phase of the US-China trade agreement.

Chinese regulatory approval of Citi’s financial market access follows similar steps for other foreign financial institutions that have long wanted to expand into the local market..

On August 21, New York-based global asset management giant BlackRock received permission to set up a wholly owned asset management business in China, according to the website of the Chinese securities regulator. The company has six months to establish a company with a registered capital of RMB 300 million ($ 43.9 million).

On June 13, a joint venture between American Express and LianLian DigiTech in China received approval from the People’s Bank of China to conduct transactions with local bank cards, according to information on the central bank’s website..

American mutual fund giant Vanguard also plans to close its operations in Hong Kong and Japan and move its Asian headquarters to Shanghai within the next six months to two years..

Vanguard said in an email to CNBC on Wednesday that the Hong Kong stock market remains critical to the company’s investment funds, and that in order to focus on individual investors, the company has decided to scale back its operations in Hong Kong, where it mainly worked with institutional clients..

There are also indications that U.S. investment bank J.P. Morgan may move closer to a buyout of its current joint venture fund management partner, China International Fund Management. The price was publicly disclosed on August 25 – 70 billion yuan ($ 1 billion), according to an online posting by the Shanghai United Asset and Capital Exchange for state-owned assets.

While business attracts a large financial market that is still in its early stages of development, skeptics argue that Beijing kept key industries like banking and payments closed until local, often state-owned, enterprises became dominant. giants.

According to The Banker’s annual ranking, China’s four large state-owned banks remain the largest in the world. Chinese tech giants Alibaba and Tencent operate the two major mobile payment systems in the country where smartphone payments are ubiquitous..

«Citi’s announcement is a further development of changes to custodian licensing rules that took place about a month ago, said Tianjun Wu, Deputy Economist, Economist Intelligence Unit (EIU). – This is another step by China towards opening up its financial sector, which means more opportunities for foreign financial institutions».

«We are facing an issue with the judicial system, ”Wu said. – It remains to be seen if the mainland China’s judiciary will be able to support a vibrant financial market and smooth operations. If not, then China will remain an important emerging market, but will not become a global financial center».