After years of hesitance and half-hearted attempts to break into the Chinese market, US and European financial services companies are investing billions of dollars here in the hopes of reaping huge profits from China's dramatic rise.
Wall Street firms and some of the world's biggest banks and insurance companies, including Bank of America and American Express, have already invested more than US$20 billion during the last three years in joint ventures or strategic stakes in dozens of Chinese banks, brokerage houses or insurance companies.
And with China promising to further reform and open its financial markets, some of world's biggest stock and futures exchanges, including the New York Stock Exchange, NASDAQ and the Chicago Mercantile Exchange, are convinced that a growing number of big stock listings and futures or derivatives trading will soon come from China.
This year alone, Bank of America put US$3 billion into the China Construction Bank; a group of investors led by the Royal Bank of Scotland and Merrill Lynch invested US$3.1 billion in the Bank of China; a Goldman Sachs-led group is investing US$3 billion in the Industrial and Commercial Bank of China; and Temasek Holdings of Singapore has agreed to invest about US$5 billion in two Chinese banks.
focus on china
The accelerated push acknowledges that China has become a focal point of the global economy. It is the world's fastest-growing major economy, and its huge trade surplus and large foreign currency reserves are solidifying its status as an economic superpower.
Of course, China's financial markets are still relatively immature. Its banking system is rife with corruption, and corporate governance is poor; its stock market is depressed and seemingly broken; its brokerage houses are insolvent; and its managed currency elicits outrage overseas because of trade disputes.
And yet, there is a growing sense around the world that now is the time to invest in China or to begin creating a platform to offer financial services products and lay the groundwork for more cross-border deals with the Chinese.
"Everyone's jockeying to get a piece of what they hope is the big growth industry," says Jonathan Anderson, chief Asian economist for UBS.
One indication of the importance of the marketplace here were the visits to Beijing this week of Alan Greenspan, the Federal Reserve chairman; Treasury Secretary John Snow; the chairman of the Securities and Exchange Commission, Christopher Cox; and the chairman of the Commodity and Futures Trading Commission, Reuben Jeffery III.
The delegation of government officials and executives repeatedly referred to the dramatic changes that have taken place in China.
They praised the Chinese government and said they expected further openings as China moves toward becoming a full-fledged market economy. They also met with China's top leaders, including Prime Minister Wen Jiabao (
But the US officials also pressed for China to further appreciate its currency, and lift restrictions on foreign investing in China, like limits on stakes in brokerage firms and banks.
"We clearly see the momentum," Marc Lackritz, president of the Securities Industry Association, said here. "In the long run, this is the growth opportunity."
realization
Underlying the visit to Beijing this week of so many high-level US officials is a realization that the US trade deficit is widening, and that, to some degree, the purchase of US homes and sport utility vehicles is being partly financed by China, which is using its huge foreign exchange reserves to purchase US Treasury notes, thereby holding down interest rates.
For years, of course, big banks, insurance companies and Wall Street firms have been coming to China seeking riches. But very few of them have returned big profits; most have been disappointed by China.
During the last few years, however, deals like Lenovo's acquisition of IBM's personal computer unit and Yahoo's US$1 billion cash investment in Alibaba.com, as well as this year's banking rush, suggest that China has turned a corner.
The list of big investors is becoming more impressive. Lately, officials from Citigroup, ABN Amro, Deutsche Bank and BNP Paribas have been prowling China for financial services investments, and committing billions of dollars to new deals. Allianz of Germany and HSBC are moving to enter China's credit-card market. The New York Stock Exchange and NASDAQ are scouting for new stock listings. And a few weeks ago, the Chicago Mercantile Exchange, one of the world's biggest futures and derivatives exchanges, played host to a conference in Shanghai.
bubble warning
Still, many analysts are already warning of a bubble here. They say, often privately, that venture capital firms, banks and others are bidding up the prices of Chinese assets to ridiculous levels; that major companies are putting staggering amounts of cash into risky ventures with suspect books.
Everyone, they say, is traveling to China these days. And everyone in the financial services world seems to have caught China fever.
Authorities have detained three former Taiwan Semiconductor Manufacturing Co (TMSC, 台積電) employees on suspicion of compromising classified technology used in making 2-nanometer chips, the Taiwan High Prosecutors’ Office said yesterday. Prosecutors are holding a former TSMC engineer surnamed Chen (陳) and two recently sacked TSMC engineers, including one person surnamed Wu (吳) in detention with restricted communication, following an investigation launched on July 25, a statement said. The announcement came a day after Nikkei Asia reported on the technology theft in an exclusive story, saying TSMC had fired two workers for contravening data rules on advanced chipmaking technology. Two-nanometer wafers are the most
Tsunami waves were possible in three areas of Kamchatka in Russia’s Far East, the Russian Ministry for Emergency Services said yesterday after a magnitude 7.0 earthquake hit the nearby Kuril Islands. “The expected wave heights are low, but you must still move away from the shore,” the ministry said on the Telegram messaging app, after the latest seismic activity in the area. However, the Pacific Tsunami Warning System in Hawaii said there was no tsunami warning after the quake. The Russian tsunami alert was later canceled. Overnight, the Krasheninnikov volcano in Kamchatka erupted for the first time in 600 years, Russia’s RIA
CHINA’s BULLYING: The former British prime minister said that he believes ‘Taiwan can and will’ protect its freedom and democracy, as its people are lovers of liberty Former British prime minister Boris Johnson yesterday said Western nations should have the courage to stand with and deepen their economic partnerships with Taiwan in the face of China’s intensified pressure. He made the remarks at the ninth Ketagalan Forum: 2025 Indo-Pacific Security Dialogue hosted by the Ministry of Foreign Affairs and the Prospect Foundation in Taipei. Johnson, who is visiting Taiwan for the first time, said he had seen Taiwan’s coastline on a screen on his indoor bicycle, but wanted to learn more about the nation, including its artificial intelligence (AI) development, the key technology of the 21st century. Calling himself an
South Korea yesterday said that it was removing loudspeakers used to blare K-pop and news reports to North Korea, as the new administration in Seoul tries to ease tensions with its bellicose neighbor. The nations, still technically at war, had already halted propaganda broadcasts along the demilitarized zone, Seoul’s military said in June after the election of South Korean President Lee Jae-myung. It said in June that Pyongyang stopped transmitting bizarre, unsettling noises along the border that had become a major nuisance for South Korean residents, a day after South Korea’s loudspeakers fell silent. “Starting today, the military has begun removing the loudspeakers,”
RSS