The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Banking

Banking in China 2.0

Two banking upstarts are resetting the relationships the Chinese have with their boring old state lenders by being convenient and readily understood. Even better, they pay great rates. But the incumbents aren’t taking this new threat lying down.

China, a land infamous for dynastic and cultural revolutions, is finally undergoing the financial revolution its bustling, vibrant, modern economy has long needed. The changes that have taken place in the world’s second-largest economy over the past 12 months have been both seismic and startling.

Last year, China’s new leaders launched the Shanghai free-trade zone, modelled on Hong Kong’s free-port system, and relaxed lending rates. Already this year, the nation’s currency, the renminbi, has started trading more freely – a big step towards the liberalization of interest rates, which top leaders, including premier Li Keqiang, see happening as early as 2015.

On March 11, Zhou Xiaochuan, governor of the People’s Bank of China, predicted that bank deposit rates would be liberalized "within one or two years", most likely in 2016 – faster than even the most bullish analyst had expected. That month also, on March 7, China’s onshore bond market suffered its first-ever default, when Shanghai Chaori Solar Energy Science & Technology failed to make a full coupon payment.

Many have long fretted that one default would open up a box worthy of Pandora, and so it might – on March 18, Beijing-based investment bank CICC in a research note highlighted at least a dozen examples of mainland corporates with limited cashflow and heavy debts, including Sinovel Wind Group and Baoding Tianwei Baobian Electric.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree