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. The complaints are also said to underlie delays in approving Singapore state investment company Temasek’s planned investment in Bank of China, as well as the $3 billion investment by a Goldman Sachs-led consortium in Industrial and Commercial Bank of China already announced. ICBC, which is planning to list in early 2006 along with BOC, also terminated discussions with Middle Eastern investors because of souring sentiment at home.