Page 90 - 2018 White Paper on the Business Environment in China
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8 White Paper on the Business Environment in China
China should further reduce restrictions on foreign cash management, trade finance and hedging, Lam said.
investors and advance efforts to continue opening up Government-owned policy and commercial lenders are
the financial sector. “Granting more access to foreign financing most of the Belt and Road opportunities with
financial institutions can be our next incremental step China Construction Bank Corp and Bank of China raising
of further opening up,” said Zhu Min, Economist and billion-dollar funds for future investment. Lam said that
Former Deputy Managing Director of the International Citigroup is also looking to increase service to Chinese
Monetary Fund (IMF). “We have pledged to treat foreign state-owned enterprises (SOEs) and other multinationals
and domestic investors equally in certain areas, and now investing overseas, and has established nine China desks
a good time has arrived to take concrete steps.” Some in locations around the world, including Dubai, Nairobi
efforts can be made in the short run, include raising the and Kazakhstan. Separately, Lam said that Citigroup has
current 25 percent stake of foreign investors in banks already benefited from ongoing discussions between
and in securities companies. In the medium to long run, Washington and Beijing over expanding access to China’s
the government should take more steps connecting financial markets. In February 2017, Citigroup became
domestic and foreign bond markets and fully open up the first U.S.-based bank to secure a license to act as a
the domestic stock market to foreign investors in the bond settlement agent in China’s interbank bond market,
future. Zhu said the government should also provide allowing its local unit to compete alongside Deutsche
greater convenience to foreign investors, making tax Bank AG and BNP Paribas SA in the country’s $9 trillion
and audit policies more compatible with international bond market (Miller).
standards. While many restrictions have been removed
since China started to open up the financial sector in With almost a trillion dollars in planned projects, the
1978, progress has slowed in recent years. The share Belt and Road project is arguably the largest overseas
of foreign capital in the Chinese stock market in 2017 investment drive ever launched by a single country.
is only around 5 percent compared with around 30 Advocates claim the initiative has the potential to
percent in the South Korean market, and foreign capital help solve a global infrastructure gap and aid growth
only accounts for around 2 percent of the Chinese bond in developing countries while boosting trade and
market, compared with 10.5 percent in Japan. China generating investor returns. Belt and Road began as a
has reached the right time to further open its borders plan for trade-boosting infrastructure projects along two
to more foreign players. More diversified market players routes — one roughly following the ancient Silk Road from
help promote economic growth and help dissolve China through central Asia and the Middle East to Europe,
financial risks (Yang, China Should). and the other linking China to Southeast Asia and east
Africa by sea. President Xi Jinping formally announced
Belt and Road the project in 2013. Growth in Western economies
had stalled and returns on domestic investment had
Citigroup expects to boost its revenue growth in China rapidly diminished in China, as overcapacity in sectors
by tapping into opportunities presented by Beijing’s from real estate to steel and cement grew problematic.
Belt and Road Initiative, the bank’s China Chief said. The Since a search for domestic economic growth is a main
New York-based lender is one of the few global banks motivation, Belt and Road is ultimately “a domestic policy
promoting its cross-border capabilities to capitalize on with geo¬strategic consequences rather than a foreign
President Xi Jinping’s Belt and Road Initiative. Christine policy”, says Charles Parton, a former E.U. diplomat in
Lam, Citigroup’s Chief Executive for China, said, “We’re China. “They think the next step is making Chinese
seeing more and more multinational customers companies globally competitive, learning management
benefiting from Belt and Road, mostly through supplying techniques and so on,” Parton adds (Hancock).
into the Belt and Road projects, particularly companies in
the industrial sector.” China is one of eight Asian markets The Belt and Road Initiative is an immensely ambitious
that produce $1 billion or more in revenue for Citigroup. development campaign through which China wants
Citigroup has banking relationships with more than 80 to boost trade and stimulate economic growth across
percent of Fortune 500 companies in China, Lam said, Asia and beyond. It hopes to do so by building massive
and provides services in 58 markets in so-called Belt amounts of infrastructure connecting it to countries
and Road countries. The bank expects to book more around the globe. By some estimates, China plans
revenue from providing services for Belt and Road to pump $150 billion into such projects each year.
related activities, including mergers and acquisitions, According to the global consultancy McKinsey, the plan
90
China should further reduce restrictions on foreign cash management, trade finance and hedging, Lam said.
investors and advance efforts to continue opening up Government-owned policy and commercial lenders are
the financial sector. “Granting more access to foreign financing most of the Belt and Road opportunities with
financial institutions can be our next incremental step China Construction Bank Corp and Bank of China raising
of further opening up,” said Zhu Min, Economist and billion-dollar funds for future investment. Lam said that
Former Deputy Managing Director of the International Citigroup is also looking to increase service to Chinese
Monetary Fund (IMF). “We have pledged to treat foreign state-owned enterprises (SOEs) and other multinationals
and domestic investors equally in certain areas, and now investing overseas, and has established nine China desks
a good time has arrived to take concrete steps.” Some in locations around the world, including Dubai, Nairobi
efforts can be made in the short run, include raising the and Kazakhstan. Separately, Lam said that Citigroup has
current 25 percent stake of foreign investors in banks already benefited from ongoing discussions between
and in securities companies. In the medium to long run, Washington and Beijing over expanding access to China’s
the government should take more steps connecting financial markets. In February 2017, Citigroup became
domestic and foreign bond markets and fully open up the first U.S.-based bank to secure a license to act as a
the domestic stock market to foreign investors in the bond settlement agent in China’s interbank bond market,
future. Zhu said the government should also provide allowing its local unit to compete alongside Deutsche
greater convenience to foreign investors, making tax Bank AG and BNP Paribas SA in the country’s $9 trillion
and audit policies more compatible with international bond market (Miller).
standards. While many restrictions have been removed
since China started to open up the financial sector in With almost a trillion dollars in planned projects, the
1978, progress has slowed in recent years. The share Belt and Road project is arguably the largest overseas
of foreign capital in the Chinese stock market in 2017 investment drive ever launched by a single country.
is only around 5 percent compared with around 30 Advocates claim the initiative has the potential to
percent in the South Korean market, and foreign capital help solve a global infrastructure gap and aid growth
only accounts for around 2 percent of the Chinese bond in developing countries while boosting trade and
market, compared with 10.5 percent in Japan. China generating investor returns. Belt and Road began as a
has reached the right time to further open its borders plan for trade-boosting infrastructure projects along two
to more foreign players. More diversified market players routes — one roughly following the ancient Silk Road from
help promote economic growth and help dissolve China through central Asia and the Middle East to Europe,
financial risks (Yang, China Should). and the other linking China to Southeast Asia and east
Africa by sea. President Xi Jinping formally announced
Belt and Road the project in 2013. Growth in Western economies
had stalled and returns on domestic investment had
Citigroup expects to boost its revenue growth in China rapidly diminished in China, as overcapacity in sectors
by tapping into opportunities presented by Beijing’s from real estate to steel and cement grew problematic.
Belt and Road Initiative, the bank’s China Chief said. The Since a search for domestic economic growth is a main
New York-based lender is one of the few global banks motivation, Belt and Road is ultimately “a domestic policy
promoting its cross-border capabilities to capitalize on with geo¬strategic consequences rather than a foreign
President Xi Jinping’s Belt and Road Initiative. Christine policy”, says Charles Parton, a former E.U. diplomat in
Lam, Citigroup’s Chief Executive for China, said, “We’re China. “They think the next step is making Chinese
seeing more and more multinational customers companies globally competitive, learning management
benefiting from Belt and Road, mostly through supplying techniques and so on,” Parton adds (Hancock).
into the Belt and Road projects, particularly companies in
the industrial sector.” China is one of eight Asian markets The Belt and Road Initiative is an immensely ambitious
that produce $1 billion or more in revenue for Citigroup. development campaign through which China wants
Citigroup has banking relationships with more than 80 to boost trade and stimulate economic growth across
percent of Fortune 500 companies in China, Lam said, Asia and beyond. It hopes to do so by building massive
and provides services in 58 markets in so-called Belt amounts of infrastructure connecting it to countries
and Road countries. The bank expects to book more around the globe. By some estimates, China plans
revenue from providing services for Belt and Road to pump $150 billion into such projects each year.
related activities, including mergers and acquisitions, According to the global consultancy McKinsey, the plan
90
