US rigorous to open Chinese banking business

Edited and translated by People's Daily Online

The Federal Reserve Board recently approved the joint purchase of at most 80 percent of the stock right of the Bank of East Asia by the Industrial and Commercial Bank of China, the China Investment Corporation and the Central Huijin Investment Ltd. It is the first time for the China-invested enterprises to purchase the US-invested banks. Meanwhile, the Federal Reserve Board has also approved the Bank of China and the Agricultural Bank of China to set up branches in Chicago and New York.

Large market demand

Chen Zhiwu, a finance professor from the Yale University, said that the strong expansion pace of China banking abroad has mainly three favorable factors.

First, the foreign trade growth pushed the financial demands including traditional trade payments forward.

Second, the demand of these financial organizations for Chinese enterprises to develop abroad also increases and the China-invested banks are more familiar with Chinese enterprises.

Third, due to financial crisis and debt crisis, many overseas banks especially the European-US banks are faced with operating difficulties, becoming potential investment and purchase objects of China-invested banks.

The approval of three Chinese banks this time not only means that the United States has recognized the overall strength and supervision standards of China banking but is a positive signal for other Chinese banks to enter the financial service of the United States.

In the long run, it is an irresistible trend for China banking to go out of China, said Guo Tianyong, director of the Banking Research Center of the Central University of Finance and Economics.

Guo thinks that, on one hand, more and more Chinese enterprises began expanding abroad, which demands Chinese banks to open branches in local places to provide a better financial service; on the other hand, the internationalization of the RMB also needs help of China banking.