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.

China: The long march to compete post-WTO

Even after China has joined the World Trade Organization, there will be a grace period of five years before foreign banks can compete head-on with local banks. But that still represents an ambitious timetable for reform. There has been progress, but the sheer scale of China’s banking system, the need to adopt new accounting standards and the number of bad loans present hurdles.

Author: Gill Baker


China's banking system faces the kinds of challenges being grappled with by bankers worldwide - except that the sheer size of its industry presents a new level of complexity. The analogy of the oil tanker that needs a lot of space and time to change course is particularly apt in China's case. And the task is made more daunting still by the need to get reform in place before World Trade Organization rules come into force, thereby opening up the market to a wave of international banks with massive experience and powerful brands.

The timeframe for the PRC's entry is still hazy, although most commentators are reckoning on the end of this year. Nevertheless it has focused the minds of bankers and regulators to a sufficient degree for a raft of new rules to be issued in an attempt to strengthen balance sheets and clean up institutions ready for the arrival of international competition.

There is not going to be a sudden takeover of the mainland's banking industry by foreign players. In the first two years of the WTO regime, banks will not be affected at all. After that, investment banking will be opened up to foreign competition, but that should have little impact on domestic institutions, which tend to focus more on retail and commercial business anyway.


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