China continues to open its financial market to foreign companies. The Chinese official media take the opportunity to underline the open attitude towards the bellicose White House. American Express will indeed be able to operate as of this year, and Mastercard has also received approval. How far does this opening go? The economic journalist Wang Jian, far removed from the official song, gives his point of view on his Youtube channel.
At the right time
After a decline in its economy in recent years, he recalled that the country had found a way to bring in more foreign capital: an opening in the financial sector. The acceleration of openness in recent months is, according to Wang, a sign of the pressing need for its economy, which is not doing well.
Moreover, a consistent Wall Street relationship with the Chinese market is a point that can help China to contain the assaults of the US administration better. For Trump, the financial markets are essential, and Beijing will undoubtedly know how to navigate them well. The maneuvers to get Chinese bonds into the Bloomberg Barclays bond market index or Chinese equities into the MSCI in recent years have made it possible to raise colossal sums of money, which Wang estimates with the two indices at USD 250 and 80 billion respectively. Wang Jian believes that this opening is good for attracting capital but does not give foreign companies access to the most profitable markets.
A. The field of essential urban services
Indeed, the area of basic urban services – telecommunications, transport, electricity, water, and financial services – remains reserved for Chinese companies and is subject to a monopoly. The Chinese authorities prefer to keep the best part of the cake for local groups because it is profitable. The first area, essential urban services, generated a profit of 5,000 billion yuan ($700 billion) last year.
B. Financial services
As for financial services, they can be broken down as follows: commercial banks recorded profits of 2,000 billion yuan, management funds 1,100 billion, insurance companies 300 billion, investment banks 1,000 billion, credit companies 60 billion.
The reserved area thus generates nearly 9 trillion yuan (more than 1 trillion dollars).
This opening exists it allows China to attract more investments. Foreign companies are developing in part of the financial sector. Wang Jian retains that the opening is only partial. Will we go further? How much further?
26 June 2020