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China is endangered by anti-foreign flu

Complaints about the prices of bank privatizations do nothing to further the cause of China’s continued integration into the global economy.

The Chinese are famous for taking a long view of history. It is an attribute that might be usefully applied in the recent unseemly squabbles in Beijing over the sale to foreigners of shares in state-owned banks.

After the success of China Construction Bank’s $9 billion IPO in Hong Kong, factions within Chinese government circles have accused the country’s central bank, the People’s Bank of China, and, in particular, governor Zhou Xiao Chuan, of selling shares in the big state-owned banks at knock-down prices. They point to the rapid appreciation in the share price of CCB since the IPO as evidence that foreigners have been allowed to get into China’s precious banking sector on the cheap.

The shouts have been loud enough to prompt a robust defence of the government’s strategy from governor Zhou and Liu Mingkang, the chairman of the China Banking Regulatory Commission.

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