China will lift barriers to foreign financial firms

2017 ◽  
Keyword(s):  
Financial Market ◽  
Market Access ◽  
Foreign Firms ◽  
Shadow Banking ◽  
Content Type ◽  
Playing Field ◽  
Market Opening ◽  
Financial Firms ◽  
China Trade ◽  
Financial Liberalisation

Subject Potential loosening of restrictions of foreign investment in the financial sector. Significance Senior officials are among the authors of a report released last month that gives policy recommendations for financial market reform, advocating broader financial market access for foreign players and a freer exchange rate. If adopted, the reforms will give foreign financial firms more control over their Chinese subsidiaries and enable them to conduct business in areas that are currently off limits to foreign investors. Impacts Broader financial market access does not guarantee a level playing field; protectionism will persist in more subtle ways. Financial market opening will not cease after the central bank's reformist governor retires; his proteges remain in key positions. Financial tightening to fight corruption, curb debt and reform shadow banking will continue, despite liberalisation vis-a-vis foreign firms. China will use financial liberalisation as a bargaining chip in US-China trade talks.

China's FDI reform will increase capital inflows

2019 ◽  
Keyword(s):  
Foreign Investment ◽  
Market Access ◽  
The United States ◽  
Capital Inflows ◽  
Foreign Firms ◽  
Trade Surplus ◽  
Content Type ◽  
China Trade ◽  
Long Run ◽  
The Right

Subject Reform of foreign investment laws in China. Significance US-China trade talks resume in Washington this week, though little detail has emerged to support reports that the two sides are making progress on core issues such as 'forced technology transfer' -- the requirement for a foreign investor to yield intellectual property in return for market access. A new law on foreign investment was passed at the National People’s Congress on March 15 and takes effect in January next year. The law establishes “national treatment” for foreign enterprises, to improve market access and treatment. Foreign firms and officials have generally described the new law as a step in the right direction, but not far enough. Impacts The new law should help ease tensions with Washington by giving US firms the greater market access they demand. Further ahead, increased inflow of capital might reduce China’s trade surplus with the United States. Greater capital inflows will not necessarily boost overall GDP growth in the long run.

Reform will improve foreign firms’ treatment in China

2020 ◽  
Keyword(s):  
Foreign Investment ◽  
Structural Changes ◽  
The United States ◽  
Foreign Firms ◽  
Foreign Investors ◽  
Content Type ◽  
Playing Field ◽  
Investment Law ◽  
The Law ◽  
Over Time

Subject Reform of China's foreign investment law. Significance The new Foreign Investment Law that took effect on January 1 is a response to a slowing economy and pressure from other governments, particularly the United States, to ‘level the playing field’ for foreign investors. Impacts There will not be a flood of new investment as a result of the law, but it will make a difference over time. Companies will have five years to prepare for structural changes as rules specific to foreign-invested companies disappear. The regulations contain few specifics on enforcement, indicating that Beijing is not yet ready to give teeth to the law.

Chinese e-commerce to grow despite internet crackdown

2016 ◽  
Keyword(s):  
Social Media ◽  
Market Access ◽  
The State ◽  
Foreign Firms ◽  
State Council ◽  
Online Publishing ◽  
Chinese Market ◽  
Content Type ◽  
Foreign Companies ◽  
Cross Border

Subject Foreign involvement in China's e-commerce sector. Significance Even as it cracks down on social media and moves to ban online publishing by foreign firms, China is easing restrictions on cross-border e-commerce. In January, the State Council announced the establishment of twelve new cross-border e-commerce pilot zones, which will make market access easier for foreign companies and lower the price of imported goods bought through cross-border e-commerce platforms operating in the zones. Impacts The cross-border e-commerce zones will help more foreign SMEs enter the Chinese market. Expansion of cross-border e-commerce zones will reduce the relative benefits to foreign retailers of a bricks-and-mortar presence in China. Further changes in tax policy affecting both bricks-and-mortar retailers and 'e-tailers' are likely this year.

China's cybersecurity law increases compliance risk

2019 ◽  
Keyword(s):  
Data Protection ◽  
Critical Infrastructure ◽  
Market Access ◽  
Foreign Firms ◽  
Critical Infrastructure Protection ◽  
Content Type ◽  
Infrastructure Protection ◽  
Collateral Effect ◽  
Cyber Affairs

Subject Implementation of China's Cybersecurity Law. Significance China’s government is implementing its Cybersecurity Law by adopting rules on data protection, critical infrastructure protection and content control. Impacts Much of the interdepartmental strife concerning cyber affairs has been resolved, meaning regulation will now develop more rapidly. Foreign firms will face market access limitations. A major collateral effect is that individuals and businesses posting information online will face greater liability for their content.

Social credit will affect foreign firms in China

2019 ◽  
Keyword(s):  
Credit Scoring ◽  
Regulatory Compliance ◽  
Foreign Firms ◽  
Credit System ◽  
Content Type ◽  
Playing Field ◽  
Foreign Companies ◽  
Social Credit ◽  
Corporate Social ◽  
The Cost

Subject China's corporate social credit system. Significance The corporate social credit system (CSCS) is now at a decisive stage as the authorities ramp up implementation and expansion nationwide. All companies, including foreign enterprises, will have to participate. Impacts Foreign companies operating in China will have to provide more data for credit scoring. The information made publicly available on CSCS platforms will be useful in evaluating the trustworthiness of business partners in China. The CSCS may level the playing field for foreign firms, because it is based on objective regulatory compliance measures. The CSCS will increase the cost of non-compliance with laws and regulations.

China's 'Internet Plus' pioneers new national IT model

2015 ◽  
Keyword(s):  
Market Access ◽  
Smart Cities ◽  
Action Plan ◽  
Personal Data ◽  
Government Procurement ◽  
Economic Life ◽  
Foreign Firms ◽  
Long Distance ◽  
Content Type ◽  
The Government

Subject China's new national IT development plan. Significance The government last month revealed an action plan called 'Internet Plus' -- an ambitious agenda of technological innovation that aims to weave information technology into all aspects of social and economic life, from smart cities and e-government to long-distance learning and healthcare. Impacts Private companies, which dominate IT, will join their state-owned counterparts as state-backed national champions. Foreign firms will face greater scrutiny and stricter security reviews; market access will be harder, especially in government procurement. There will be some new opportunities for foreign firms, but their Chinese counterparts will become more competitive internationally too. Disregard for protection of personal data will enable China to become a leader in sophisticated data analysis. Internationally, China will pursue recognition of national sovereignty as the fundamental principle for global internet governance.

Evolving existence of assets and liabilities of foreignness

2019 ◽  
Vol 13 (1) ◽  
pp. 72-90
Author(s):  
Lee Keng Ng ◽  
Louise Curran
Keyword(s):  
Market Access ◽  
Decision Makers ◽  
Foreign Firms ◽  
Chinese Market ◽  
Content Type ◽  
Study Approach ◽  
Corrosive Effect ◽  
High Level ◽  
Depth Interviews

Purpose The purpose of this paper is to explore the simultaneous evolution of LOF and AOF in the context of environmental protection (EP) companies from Europe in the Chinese market. Design/methodology/approach The authors adopt a qualitative, case study approach, using interview data to explore the extent of liability of foreignness and how the FSAs of firms have changed from the time on market entry. The authors undertook 15 in-depth interviews with decision makers in six companies addressing their experience of foreignness during their long tenure in China. To control for sector-level effects, the authors focus on companies in the EP sector. Findings The authors found the evolving AOF of the firms were challenged to a significant extent that caused difficulties in reducing their LOF over time. The EP sector is dominated by state-owned enterprises that have unique organized structure preventing localized foreign firms from gaining access into the institutionalized network. This deeply quilted institutionalized network had a corrosive effect in the gradual erosion of the LOF manifested from unfair price strategy practice, forced collaborations, ostracization of project participations, operational barriers, prohibited and restricted market access. The research also uncovered the rebirth nature of LOF that caused AOF to lose its significance across bureaucracy and ownership changed. Research limitations/implications The relatively small number of cases (six) limits the generalizability of the findings by the authors. However, the authors are convinced that, given that the case companies are generally large and have long experience in China, the conclusions made are well grounded. In addition, there was the high level of coherence in the reported experiences of the interviewees, providing further support for the findings. Practical implications The experiences of these case study companies highlight that MNEs need to be vigilant and creative in constantly improving their FSAs so that the competitive distance between them and the local competitors remains substantial. Originality/value Very few studies have explored both assets and liabilities of foreignness in the host country regulatory context using a case study-based qualitative approach, especially in emerging markets.

China’s shadow banking sector: beneficial or harmful to economic growth?

2015 ◽  
Vol 7 (4) ◽  
pp. 421-445 ◽  
Author(s):  
James R. Barth ◽  
Tong Li ◽  
Wen Shi ◽  
Pei Xu
Keyword(s):  
Economic Growth ◽  
Banking Sector ◽  
Commercial Banking ◽  
Global Perspective ◽  
Shadow Banking ◽  
Content Type ◽  
Wide Range ◽  
Recent Developments ◽  
Major Factors ◽  
Made In

Purpose – The purpose of this paper is to examine recent developments pertaining to China’s shadow banking sector. Shadow banking has the potential not only to be a beneficial contributor to continued economic growth, but also to contribute to systematic instability if not properly monitored and regulated. An assessment is made in this paper as to whether shadow banking is beneficial or harmful to China’s economic growth. Design/methodology/approach – The authors start with providing an overview of shadow banking from a global perspective, with information on its recent growth and importance in selected countries. The authors then focus directly on China’s shadow banking sector, with information on the various entities and activities that comprise the sector. Specifically, the authors examine the interconnections between shadow banking and regular banking in China and the growth in shadow banking to overall economic growth, the growth in the money supply and the growth in commercial bank assets. Findings – Despite the wide range in the estimates, the trend in the size of shadow banking in China has been upward over the examined period. There are significant interconnections between the shadow banking sector and the commercial banking sector. Low deposit rate and high reserve requirement ratios have been the major factors driving its growth. Shadow banking has been a contributor, along with money growth, to economic growth. Practical implications – The authors argue that shadow banking may prove useful by diversifying China’s financial sector and providing greater investments and savings opportunities to consumers and businesses throughout the country, if the risks of shadow banking are adequately monitored and controlled. Originality/value – To the authors’ knowledge, this paper is among the few to systematically evaluate the influence of shadow banking on China’s economic growth.

Shadow banking from China's perspective: an empirical analysis of bank-issued wealth management products

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Syed Mehmood Raza Shah ◽  
Qiang Fu ◽  
Ghulam Abbas ◽  
Muhammad Usman Arshad
Keyword(s):  
Commercial Banks ◽  
Fixed Effects ◽  
Banking Sector ◽  
Balance Sheet ◽  
Estimation Method ◽  
Least Square ◽  
Shadow Banking ◽  
Content Type ◽  
Wealth Management ◽  
Chinese Banks

PurposeWealth Management Products (WMPs) are the largest and most crucial component of China's Shadow banking, which are off the balance sheet and considered as a substitute for deposits. Commercial banks in China are involved in the issuance of WMPs mainly to; evade the regulatory restrictions, move non-performing loans away from the balance sheet, chase the profits and take advantage of yield spread (the difference between WMPs yield and deposit rate).Design/methodology/approachIn this study, the authors investigate what bank related characteristics and needs; influenced and prompted the issuance of WMPs. By using a quarterly panel data from 2010 to 2019, this study performed the fixed effects approach favored by the Hausman specification test, and a feasible generalized least square (FGLS) estimation method is employed to deal with any issues of heteroscedasticity and auto-correlation.FindingsThis study found that there is a positive and significant association between the non-performing loan ratio and the issuance of WMPs. Moreover, profitability and spread were found to play an essential role in the issuance of WMPs. The findings of this study suggest that WMPs are issued for multi-purpose, and off the balance sheet status of these products makes them very lucrative for regulated Chinese commercial banks.Research limitations/implicationsNon-guaranteed WMPs are considered as an item of shadow banking in China, as banks do not consolidate this type of WMPs into their balance sheet; due to that reason, there is no individual bank data available for the amount of WMPs. The authors use the number of WMPs issued by banks as a proxy for the bank's exposure to the WMPs business.Practical implicationsFrom a regulatory perspective, this study helps regulators to understand the risk associated with the issuance of WMPs; by providing empirical evidence that Chinese banks issue WMPs to hide the actual risk of non-performing loans, and this practice could mislead the regulators to evaluate the bank credit risk and loan quality. This study also identifies that Chinese banks issue WMPs for multi-purpose; this can help potential investors to understand the dynamics of WMPs issuance.Originality/valueThis research is innovative in its orientation because it is designed to investigate the less explored wealth management products (WMPs) issued by Chinese banks. This study's content includes not only innovation but also contributes to the existing literature on the shadow banking sector in terms of regulatory arbitrage. Moreover, the inclusion of FGLS estimation models, ten years of quarterly data, and the top 30 Chinese banks (covers 70% of the total Chinese commercial banking system's assets) make this research more comprehensive and significant.

The effect of supplier globalization on firm innovation: a resource dependence theory perspective

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yibo Wang ◽  
Bai Liu
Keyword(s):  
Resource Dependence ◽  
Positive Impact ◽  
Market Competition ◽  
Effective Means ◽  
Resource Dependence Theory ◽  
Institutional Distance ◽  
Foreign Firms ◽  
Firm Innovation ◽  
Content Type ◽  
Dependence Theory

PurposeEither buying or making is predicted by the existing literature for firms to reduce dependence. However, firms in the rapid globalization are found to adopt a pattern of buying and making. Specially, they critically rely on foreign firms for needed materials and goods, and invest in innovation against the uncertainty of potential supply disruptions simultaneously. Therefore, this paper seeks to investigate how the depth and width of supplier globalization shape firm innovation together. Moreover, the moderating effects of institutional distance and market competition are also examined in the paper.Design/methodology/approachGrounded on the resource dependence theory, this paper develops a theoretical framework and tests the proposed hypotheses by Poisson model using secondary data from 502 Chinese listed firms with foreign suppliers.FindingsThe depth of supplier globalization has a positive impact on firm innovation, while the width of supplier globalization weakens firm innovation. The depth and width of supplier globalization further interact negatively to influence firm innovation. Moreover, this relationship is enhanced when firms establish relationships with foreign firms with greater institutional distance and is weakened when firms face fiercer product competition.Originality/valueThe authors contribute to the literature by evidencing that the existence of foreign suppliers results in firms' enhancement of innovation to secure their operations and showing that diversifying the country origins of foreign suppliers is an effective means to reduce firms' uncertainty about supply disruption. We also advance the understanding regarding the contextual factors in which firms are more likely or less likely to manage the uncertainty about supplier globalization.

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