The People's Bank of China (BOC), the country's central bank, announced on March 3 in Beijing that it has granted licenses to seven foreign banks to engage in yuan business in China.

The banks are the Shanghai branches of the Commercial Bank of Germany, the ANZ Banking Group, the Asahi Bank of Japan, and the Korea Development Bank, and the Shenzhen branches of the Sanwa Bank and the Fuji Bank, among others. A spokesman for the BOC said this move marks the further opening of China's financial sector and will bring new opportunities and challenges to the Chinese economy and its financial sector.

China opened yuan business to foreign banks in early 1997, when the BOC approved nine foreign banks to engage in this business on an experimental basis in the Pudong New Area of Shanghai. To date, the BOC has given yuan licenses to 32 foreign banks, including 24 in Shanghai and eight in Shenzhen. The opening of China's financial market has been a gradual process over the last two decades, from coastal areas to the interior, and from foreign currency to the yuan. In the last five years, restrictions on the operations of foreign banks and their business range and customers category have been improved remarkably.

According to BOC statistics, by the end of 1999, foreign banks had opened 157 branches, 13 locally registered banks, 248 representative offices, and 7 financial service companies in China. At the same time, the total assets of foreign banks operating in China stood at 31.8 billion U.S. dollars, their loan balance was 21.8 billion dollars, and their deposit balance 5.20 billion dollars. By the end of 1999, yuan deposits in foreign banks in China amounted to 6.70 billion yuan, and their yuan loans stood at 5.44 billion yuan.