Advertisement

The State’s Role in a Strategic Industry—China’s Banking Sector

  • Ran Li
  • Kee Cheok Cheong
Chapter

Abstract

China’s state-owned banking sector’s designation as a strategic sector has seen it experiencing a slower pace of reforms compared with non-financial state enterprises. The reasons for this divergence are historical, being rooted in China’s unhappy experience during the early years of its modern banking history. This chapter charts China’s turbulent banking history, and reviews how the sector responded to the state’s reform policies. Major policies and external circumstances impact the performance of China’s state-holding banks. The major policies are China’s entry into the World Trade Organization in 2001 and the state’s decision to expand its global role around the same time. The external development discussed is the onset of the Global Financial Crisis in late 2008. Some concluding remarks about this sector are offered.

References

  1. Agricultural Bank of China (2014). The development history of Agricultural Bank of China. Retrieved from http://www.abchina.com/cn/AboutABC/nhfm/nhlch/
  2. Bank of China (2014a). The important turning point for Bank of China—restructuring to the international exchange bank (1928). Retrieved from http://www.boc.cn/aboutboc/ab7/200809/t20080926_6925.htmlGoogle Scholar
  3. Bank of China (2014b). National government’s financial monopoly forcing Bank of China to restructure again (1935). Retrieved from http://www.boc.cn/aboutboc/ab7/200809/t20080926_6916.htmlGoogle Scholar
  4. Bank of China (2014c). Nanjing government establishing four-joint headquarters, adjusting the division of four banks (1939). Retrieved from http://www.boc.cn/aboutboc/ab7/200809/t20080926_6915.htmlGoogle Scholar
  5. Berger, A.N., Hasan, I., & Zhou, M. (2009). Bank ownership and efficiency in China: What will happen in the world’s largest nation? Journal of Banking & Finance, 33(1), 113–130.CrossRefGoogle Scholar
  6. Bloomberg (2017). China’s $8.5 trillion shadow banking industry is back in full swing, April 19. Retrieved from https://www.bloomberg.com/news/articles/2017-04-18/china-s-8-5-trillion-shadow-bank-industry-is-back-in-full-swingGoogle Scholar
  7. Caijing.com.cn (2012). The republic of China was established, Bank of China came into being (1912)). Retrieved from http://www.caijing.com.cn/2012-01-17/111626505.htmlGoogle Scholar
  8. China.com.cn (2008). From Daqing Bank to Bank of China: The epitome of modern Chinese banks. Retrieved from http://www.china.com.cn/international/txt/2008-01/11/content_9517627.htmGoogle Scholar
  9. Chinadaily.com.cn (2006). People’s Bank of China. Retrieved from http://www.chinadaily.com.cn/bizchina/2006-11/16/content_734959.htmGoogle Scholar
  10. China Construction Bank (2014). The brief history of China Construction Bank. Retrieved from http://www.ccb.com/cn/investor/history.html
  11. Culture.china.com.cn (2010). Chiang Kai-shek attempts to spare none through economic blockade, Soviet area communists and civilians wisely fight. Retrieved from http://www.china.com.cn/culture/lishi/2010-05/20/content_20082076_2.htmGoogle Scholar
  12. Davis, B., & Orlik, T. (2013). World Bank design comprehensive reform blueprint for Chinese economy. Retrieved from http://cn.wsj.com/gb/20130802/bch072538.asp?source=whatnews
  13. Dobson, W. and Kashyap, A.K. (2006). The contradiction in China’s gradualist banking reforms. Brookings Papers on Economic Activity, 2, 103–162.CrossRefGoogle Scholar
  14. Forbes (2017). The world’s biggest public companies. Retrieved from https://www.forbes.com/global2000/list/
  15. Friedman, M. (1992). Franklin D. Roosevelt, silver and China. Journal of Political Economy, 100(1), 62–83.CrossRefGoogle Scholar
  16. Genevieve, B. D., & Wei, S. J. (2005). Pitfalls of a state-dominated financial system: The case of China. National Bureau of Economic Research.Google Scholar
  17. Guo, X., & Lu, G. (2013). The capital thief staring on China: HSBC in China 150 years. China Youyi Press.Google Scholar
  18. Huang, Y., Wang, X., Wang, B., & Lin, N. (2010). Financial reform in China: Progress and challenges. Paper presented at the Conference on Financial Liberalization in China, Japan and Korea, Seoul, Korea.Google Scholar
  19. Industrial and Commercial Bank of China (2013b). ICBC officially started RMB payment and clearing services in Singapore. Retrieved from http://www.icbc.com.cn/icbc/gxk_1/12452.htmGoogle Scholar
  20. Industrial and Commercial Bank of China (2013a). Looking back to Industrial and Commercial Bank of China’s history (1984–2006). Retrieved from http://www.icbc-ltd.com/ICBCLtd/关于我行/历史回眸/
  21. Jiang, C. (2008). The President of BoCom: The authority of foreign equity participation in domestic financial system should not be enlarged. Retrieved from http://money.163.com/08/0918/07/4M3TMKHV00251LIE.html
  22. Khor, H.E., & Tan, K.S. (2011). An Asian response to international financial reforms. East Asia Forum. Retrieved from http://www.eastasiaforum.org/2010/11/10/an-asian-response-to-international-financial-reforms/Google Scholar
  23. Kollewe, J. and Monahan, A. (2015). Analysts fear China financial crisis as deflation looms. The Guardian. January 9. Retrieved from https://www.theguardian.com/business/2015/jan/09/china-economic-crash-bank-of-america-analysts
  24. Kwan, C.H. (2009). Reform of China’s state-owned banks a success. Nomura Journal of Capital Markets, 1(4). Retrieved from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1566662
  25. Lenin, V.I. (1973). V.I. Lenin collected works, Volume 32, December 1920—August 1921. Moscow: Progress Publishers.Google Scholar
  26. Lipsky, J. (2011). China: Economic transformation and financial reform. The International Forum of Sovereign Wealth Funds. Beijing, China.Google Scholar
  27. Liu, H. (1999). The Set up and role of the Central Bank of Nanjing Nationalist Government. Republican Archives, 3, 76–87.Google Scholar
  28. Liu, M. (2009). 30 years of reform and opening up of China’s banking sector. Beijing: China Finance Press.Google Scholar
  29. The Central People’s Government of the People’s Republic of China (2005). The Civil Servant Law of the People’s Republic of China. Retrieved from http://www.gov.cn/flfg/2005-06/21/content_8249.htm
  30. The Central People’s Government of the People’s Republic of China (2012). Seeking for opinions on commercial bank service price management measures. Retrieved from http://www.gov.cn/gzdt/2012-02/10/content_2063605.htm
  31. The China Banking Regulatory Commission (2003). Management measures on foreign financial institutions investing to joint shares in Chinese financial institutions. Retrieved from http://www.cbrc.gov.cn/chinese/home/docDOC_ReadView/295.html
  32. The China Banking Regulatory Commission (2006a). Disposal of non-performing assets by the four AMCs in 2006. Retrieved from http://www.cbrc.gov.cn/EngdocView.do?docID=2464
  33. The China Banking Regulatory Commission (2006b). Q&A on WTO and opening up of China’s banking sector. Retrieved from http://www.cbrc.gov.cn/chinese/home/docView/2864.html
  34. The China Banking Regulatory Commission (2008). The Commercial Banking Law of People’s Republic of China. Retrieved from http://www.cbrc.gov.cn/chinese/home/docView/2421.html
  35. The China Banking Regulatory Commission (2013). Main performance index sheet of commercial banks (legal person). Retrieved from http://www.cbrc.gov.cn/chinese/home/docView/123C72BD103540C2B679F0A4BA19E903.html
  36. The China Banking Regulatory Commission (2014). The main functions of China Banking Regulatory Commission. Retrieved from http://www.cbrc.gov.cn/chinese/yjhjj/index.html
  37. The Ministry of Finance of the People’s Republic of China (2013). Statements regarding the central state-owned capital operation budget in 2013. Retrieved from http://yss.mof.gov.cn/2013zyczys/201303/t20130322_784806.html
  38. The International Monetary Fund (2011). People’s Republic of China—Financial system stability assessment. Washington D.C.Google Scholar
  39. The World Trade Organization (2010). Trade policy review: China (Revised). Geneva: WTO, 2010.Google Scholar
  40. McCormick, D. (2008). No time for retrenchment—Why China should push ahead with financial liberalization. International Economy, 22(3), 66–69.Google Scholar
  41. Matthews, K., & Zhang, N. (2010). Bank productivity in China 1997–2007: Measurement and convergence. China Economic Review, 21(4), 617–628.CrossRefGoogle Scholar
  42. Marx, K., & Engels, F. (1959). The communist manifesto. London: Penguin Books.Google Scholar
  43. Mitchell, T. and McGee, P. (2015). World Bank warns China to reform its ‘distorted’ financial system. Financial Times. July 1. Retrieved from http://www.ft.com/cms/s/0/bf01a54c-1fa1-11e5-aa5a-398b2169cf79.html#axzz4GvCAB1Iw
  44. Okazaki, K., Hattori, M., & Takahashi, W. (2011). The challenges confronting the banking system reform in China: An analysis in light of Japan’s experience of financial liberalization. Institute for Monetary and Economic Studies, Bank of Japan.Google Scholar
  45. Qu, M., & Luo, W. (2011). The history of Chinese banking industry: From the late Qing Dynasty to the moment. City University of HK Press.Google Scholar
  46. Relbanks.com (2017). Top 100 banks in the world. Retrieved from https://www.relbanks.com/worlds-top-banks/assetsGoogle Scholar
  47. Rfa.org (2016). China’s four big state-owned Banks reported rising non-performing loans. Retrieved from https://www.rfa.org/mandarin/yataibaodao/jingmao/nu-08302016112129.html
  48. Song, H. (2011). Currency wars 3: Financial high frontier. Beijing: Chinese Chamber of Commerce and Industry Publishing House.Google Scholar
  49. Stent, J. (2017). China’s banking transformation: The untold story. Oxford: Oxford University Press.Google Scholar
  50. SWIFT (2017). Whether the Belt and Road can revive the internationalization of the Renminbi? Retrieved from https://www.swift.com/zh-hans/resource/rmb-tracker-july-2017
  51. Wang, Z. (2010). The rise of Soviet Union. Operation Barbarossa. Beijing: Foreign Languages Press.Google Scholar
  52. Wolf, M. (2008). Fixing global finance. Baltimore: Johns Hopkins University Press.Google Scholar
  53. Wu, Y. (2006). On Hong Kong and Shanghai banking corporation and modern China’s trade financing and international exchanging. Journal of Beijing Union University (Humanities and Social Sciences), (2).Google Scholar
  54. Xu, J., Yeh, A., & Wu, F. (2009). Land commodification: New land development and politics in China since the late 1990s. International Journal of Urban and Regional Research, 33(4), 890–913.CrossRefGoogle Scholar
  55. Yao, X., & Wu, X. (2011). Transition of China’s financial system after the Global Financial Crisis. The World Economy, 34(5), 792–804.CrossRefGoogle Scholar
  56. Zgjrjw.com (2014). The banking sector memorabilia of economic reform and opening up 30 years. Retrieved from http://www.zgjrjw.com/zt/jr30/index.htmlGoogle Scholar
  57. Zhang, W. (2006). China’s SOE reform: A corporate governance perspective. Corporate Ownership and Control, 3, 132–150.Google Scholar
  58. Hexun.com (2007). Zhou Xiaochuan: Central Huijing’s transformation to Temasek. Retrieved from http://futures.money.hexun.com/1992245.shtmlGoogle Scholar
  59. Huo, S., Wang, X., & Wang, W. (2001). Cadres’ reader on some current significant social and economic problems. Beijing: Party School of the Central Committee of China Communist Party Publishing House.Google Scholar
  60. Zhang, Z., & Cheong, K.C. (2011). China’s SMEs and the Global Crisis: Challenges and opportunities. Paper presented at the 8th SMEs in a Global Economy Conference, Nong Khai, Thailand.Google Scholar
  61. Zhen, S. (2004). How to use RMB 450 trillion of fund injection when the big-4 banks are conducting the ownership reform? Retrieved from http://www.china.com.cn/chinese/2004/Feb/490751.htm
  62. Zhou, T., & Xia, X. (2008). The progress of China’s state enterprises reform. In Zou, D. (Eds.), China: 30 years of reform and opening-up (1978–2008). Beijing: Social Science Academic Press.Google Scholar

Copyright information

© The Author(s) 2019

Authors and Affiliations

  • Ran Li
    • 1
  • Kee Cheok Cheong
    • 1
  1. 1.Institute of China StudiesUniversity of MalayaKuala LumpurMalaysia

Personalised recommendations