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  • Author: Sangbaek Hyun, Suyeob Na, Young Sun Kim, Koun Cho, Bongkyo Seo
  • Publication Date: 04-2021
  • Content Type: Policy Brief
  • Institution: Korea Institute for International Economic Policy (KIEP)
  • Abstract: The opening of China's financial sector has progressed at a very slow pace, unlike the manufacturing and trade sectors that have pushed for an active opening to the outside world. The Chinese economy has been growing rapidly while serving as a global production base, but since 2012, it has become necessary to modify its approaches to achieve growth as it enters an era of medium-speed growth. Recently, new reform and opening measures have been taken in various fields to improve the quality of the Chinese economy, and the need for reform and opening in the financial sector has also increased. Internally, the financial system centered on China's state-owned commercial banks has focused on indirect financing, which has served as a major obstacle to upgrading China's economy and industry to the next level, further increasing the need for reform and opening of the financial sector. Moreover, externally, the U.S.-China conflict which began in earnest in 2018, is applying strong pressure toward reform and opening in China’s financial sector. The Chinese government began to show a proactive attitude toward financial opening amid such internal needs and external pressure, and an important development was seen in China’s financial opening when President Xi Jinping declared further opening measures at the Boao Forum in April 2018. The Chinese financial authorities have prepared follow-up measures related to financial opening, and the Chinese government’s efforts toward financial opening in the three years from 2018 to 2020 yielded more results than the ten-year opening period since its accession to the WTO. Against this backdrop, this study examines the main contents of China’s financial opening process, which has been accelerating recently, and derives evaluation and implications.
  • Topic: Finance, Economy, Economic Growth, Banks
  • Political Geography: China, Asia, Korea
  • Author: Andrew Liu
  • Publication Date: 01-2019
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: In 2016 alone, China saw $9 trillion in mobile payments—in contrast to a comparably small $112 billion of mobile payments in the United States (Abkowitz 2018). The use of mobile payment systems such as Alipay and WeChat Pay are widespread in China, with users ranging from beggars to lenders to criminals. Previously, the mobile payments landscape was largely untouched and unregulated by the Chinese government because of its relative insignificance in the Chinese economy. However, with the explosive growth in mobile payment transactions, the People’s Bank of China (PBOC) implemented a new mobile payment regulation on June 30, 2018. Most notably, the government will require all mobile payments to be cleared through the PBOC, and hence, all mobile payment transactions will begin to touch the hands of the Chinese Communist Party (CCP) (Hersey 2017). The PBOC’s stated reasoning for implementing this regulation is to curb money laundering and fraud. While those are valid concerns, it is unlikely that there are not additional motivations for the new regulation. In this article, I analyze the effects this new regulation has had and will likely have on the various mobile payment system stakeholders, competitors, and users, and also uncover what underlying motives the PBOC has in implementing the regulation.
  • Topic: Government, Regulation, Economy, Banks, Chinese Communist Party (CCP)
  • Political Geography: China, Asia
  • Author: Yiping Huang, Tingting Ge
  • Publication Date: 01-2019
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: When China began economic reform in 1978, it had only one financial institution, the People’s Bank of China (PBOC), which, at that time, served as both the central bank and a commercial bank and accounted for 93 percent of the country’s total financial assets. This was primarily because, in a centrally planned economy, transfer of funds was arranged by the state and there was little demand for financial intermediation. Once economic reform started, the authorities moved very quickly to establish a very large number of financial institutions and to create various financial markets. Forty years later, China is already an important player in the global financial system, including in the banking sector, direct investment, and bond and equity markets. However, government intervention in the financial system remains widespread and serious. The PBOC still guides commercial banks’ setting of deposit and lending rates through “window guidance,” although the final restriction on deposit rates was removed in 2015. Industry and other policies still play important roles influencing allocation of financial resources by banks and capital markets. The PBOC intervenes in the foreign exchange markets from time to time, through directly buying or selling foreign exchanges, setting the central parity, and determining the daily trading band. The regulators tightly manage cross-border capital flows, and the state still controls majority shares of most large financial institutions.
  • Topic: Economics, Foreign Exchange, Reform, Financial Markets, Banks
  • Political Geography: China, Asia
  • Author: Jeffrey D. Wilson
  • Publication Date: 01-2019
  • Content Type: Journal Article
  • Journal: International Relations of the Asia-Pacific
  • Institution: Japan Association of International Relations
  • Abstract: China’s Asian Infrastructure Investment Bank (AIIB) is a controversial addition to both the global and Asian economic architectures. Western critics have alleged it is a vehicle designed to achieve China’s geostrategic goals, while scholars have argued it marks China’s adoption of a ‘revisionist’ foreign policy strategy. This article argues that such interpretations are incorrect, as they fail to account for the evolution of China’s AIIB agenda. To secure a broad membership and international legitimacy for the AIIB, China compromised with partners during governance negotiations in 2015. Western country demands saw several controversial initial proposals dropped, the governance practices of existing multilateral development banks were adopted, and cooperative partnerships were developed with the World Bank and Asian Development Bank. This transition from a revisionist to status-seeking AIIB agenda reveals the flexibility of Chinese economic statecraft, and its willingness to compromise strategic goals to boost the legitimacy of its international leadership claims.
  • Topic: International Relations, Foreign Policy, Geopolitics, Banks
  • Political Geography: China, Asia
  • Author: Michael Tiboris
  • Publication Date: 05-2019
  • Content Type: Special Report
  • Institution: Chicago Council on Global Affairs
  • Abstract: Addressing China's Rising Influence in Africa MAY 21, 2019 By: Michael Tiboris, Nonresident Fellow, Global Water Key facts and figures China is now the largest trading partner for the African continent, and China’s Export-Import Bank aims to invest more than $1 trillion in the continent by 2025. In addition, China has now surpassed the United States government in total agriculture R&D funding. China has increased its presence in African development—a trend that will persist because its model is extremely attractive to both China and many African nations. China’s growing contributions to African development should not automatically be feared, but their increased presence should create a recalibration in US approaches to development. Current US National Security Advisor and former Ambassador John Bolton in his announcement of the administration’s Prosper Africa initiative cast China’s presence in Africa as a strategic challenge for the United States. The market opportunities on the African continent are enormous. Consumer expenditure is expected to reach $2.1 trillion by 2025 and $2.5 trillion by 2030. The World Bank estimates that the African food market alone could be worth $1 trillion by 2030, more than tripling the current $300 million market. China’s ability to directly finance and construct infrastructure projects with fewer conditions is unique and has raised worries in some quarters about the expropriation of natural resources, environmental hazards, labor displacement, unstable debt burdens, and land grabs. In addition, China’s investment strategy leaves notable gaps that the United States, leaning on its expertise, can fill. The most direct and sustainable mechanism for moving people out of poverty is investment in agriculture—in particular, smallholder agriculture. US leadership on global water, food, and nutrition security is essential to catalyze the innovations and development necessary to achieve US foreign policy and development goals on the continent. To maintain its global leadership in this strategically important continent, the United States should consider prioritizing technical assistance for water sustainability and thereby support sanitation and agricultural growth. The United States must also continue to find ways to deepen its relationships with African partners to demonstrate US commitment to building resilience and self-reliance in these communities for the long term. Simultaneously, the United States and its allies should work through international institutions to encourage China to adopt policies that achieve shared global objectives in economic development, security, human welfare, and sustainability.
  • Topic: Infrastructure, Banks, Trade, Strategic Competition
  • Political Geography: Africa, China, Asia, North America, United States of America
  • Author: Carlos Eduardo Carvalho, João Paulo Nicolini Gabriel
  • Publication Date: 10-2018
  • Content Type: Journal Article
  • Journal: Conjuntura Austral: Journal of the Global South
  • Institution: Conjuntura Austral: Journal of the Global South
  • Abstract: The launch of a vision document for Asia-Africa Growth Corridor (AAGC) at the African Development Bank meeting in Gujarat in 2017 reveals an important aspect to grasp the awkening of a strategy to face China’s rise. This conference of the African Development Bank (AfDB) is a landmark for this initiative. This bank is a mechanism for economic and social development with the participation of non-African members (e.g. China, India, Brazil, the United States, and Japan). The main contributors to the African Development Fund -linked to this bank -are the United Kingdom, the USA and Japan. Beijing does not figure among the most influent members of this organization. Thus, it was an opportunity for think tanks, supported by India and Japan, to introduce the idea of a corridor aimed to link Asia to Africa in order to increase co-operation in agriculture, social development and technology sharing.
  • Topic: Development, International Political Economy, International Trade and Finance, Economic Growth, Banks, Trade, Economic Development , Trade Policy, Economic Cooperation
  • Political Geography: Africa, Japan, China, Asia