What are the disadvantages of China's banking industry compared with foreign banks?

The full opening of finance has ushered in the best opportunity.

■ Compared with the passive opening of South Korea and Japan, our situation is much better. South Korea's opening-up was forced by the financial crisis and the situation, while China's opening-up was an initiative to fulfill its commitments when it entered the WTO.

■ Openness will definitely intensify competition, but it cannot be regarded as a scourge. Within ten years, the share of foreign banks will increase by 10%, but it is still very small, and the bulk will still be in China.

■ Establish a correct concept when introducing foreign capital. Even in the United States and many European countries, which are considered to be the most open and fully market-oriented, the proportion of domestic and foreign banks is only about 10%. It is unacceptable to stand still, but it is also unacceptable to rely too much on foreign capital.

■ Finally, we must take a balanced road: on the one hand, we must put pressure on domestic financial institutions through opening up; On the other hand, opening to the outside world cannot have a big impact on the domestic financial system. It is necessary to properly protect the fast-developing and underdeveloped local financial markets, but we can't ignore the backwardness of protection and not open up.

8 1 day, China's financial industry will be fully open to the outside world.

20011211In the protocol of China's accession to the WTO, the trade in financial services was written with great colors. Interestingly, the multinational financial giants standing behind foreign governments have shown great interest in China's insurance, securities and fund industries in this protocol, but it seems that they are not interested in the banking industry, which occupies the main position of China's financial system and accounts for as much as 80%.

Zhou Xiaochuan, governor of the People's Bank of China, revealed with emotion that during the WTO accession negotiations, few foreign governments and multinational financial giants requested to enter the banking industry in China. At that time, even if foreign investors are invited to invest in China's banking industry, I'm afraid no one wants to come.

Now the situation is completely different. The rapid economic growth in China for five years and the substantial progress in the reform of state-owned commercial banks have stimulated foreign investors to flock to China, and their target is the banking industry, the core of's financial system.

At the end of August, Schwab, the new US trade representative, visited China. She strongly urged the China government to abide by its WTO commitments and accelerate the full opening of the financial industry.

At the same time, since the end of last year, China has paid more and more attention to a series of questions about financial opening: Is the banking opening in China excessive? How to promote the remodeling of China's financial structure while promising to open the market? How to grasp national financial sovereignty and financial security in the process of opening up? Can China's banking industry cope with the coming of full opening?

On the eve of full opening, the reporter specially invited Zhan Xiangyang, deputy director of the Financial Research Institute of the State Council Development Research Center and director of the Urban Finance Research Institute of China Industrial and Commercial Bank, Shen, chief economist of Citigroup in China, Xiao Geng, chief economist of Goldman Sachs Group in Asia and associate professor of the School of Economics and Finance of HKU, to discuss the strategy and tactics of China's financial opening.

Financial opening has made rapid progress.

Reporter: In a few months, China's financial industry will be fully open to the outside world. At present, there are voices in China saying that we are too open, and there are voices abroad saying that China is not open enough. How to evaluate the opening process of China's financial industry in the past five years, and how open is China's financial industry at present?

Ba Shusong: The opening of China's entry into WTO can be divided into two parts: the first part is the opening we promised when we entered WTO; The second part is independent opening, that is, opening beyond commitment.

In the financial field, China's progress in these two parts is relatively fast. On the one hand, it is certain that the commitment to join the WTO will be basically realized by the end of 2006; On the other hand, our independent opening up in some aspects has actually exceeded our commitment to join the WTO. For example, restrictions on the shareholding ratio of commercial banks, the opening of RMB business, bank retail business and so on. , either ahead of the original opening period, or more open than promised, or China's current open position in specific fields is higher than that of developed countries.

In the past five years, one of the biggest advances in the opening of the financial industry is the deepening understanding of financial opening. There is a completely opposite understanding. Some people think that not opening is closed, and some people think that opening is that foreign financial institutions come in casually. After several years of gradual opening up, it is generally believed that we should finally take a balanced road: on the one hand, we should exert pressure on domestic financial institutions through opening up; On the other hand, opening to the outside world cannot have a big impact on the domestic financial system. It is necessary to properly protect the fast-developing and underdeveloped local financial markets, but the backwardness of protection cannot be ignored.

Shen: Generally speaking, China's financial industry is much more open to the outside world than to the inside. As for whether the opening of the financial industry can fully meet the requirements of the WTO by the end of this year, there are still some uncertainties, mainly at the operational level (such as how to define foreign banks, etc.). ), and in principle the possibility of deviation is very small. In the past five years, China has followed the principle of gradually opening up its financial industry, which is a strategy chosen by China from its own reality. Its banking system is not very good, and it is hard to imagine what would happen if China's banking industry suddenly opened its doors.

Zhan Xiangyang: It has been suggested that foreign banks only account for 2% of the domestic banking market in China. Accordingly, they think that the opening up of China's financial industry is still very limited. As far as I know, 2% only refers to the market share of wholly foreign-owned banks in China, excluding the market share indirectly occupied by foreign investors through equity participation in Chinese banks. At present, foreign capital has entered 18 commercial banks in China through joint ventures, and foreign capital has accounted for more than 15% of the total capital of China's banking industry. Capital controls assets, which is common sense in economics. Accordingly, the control power of foreign capital over China's banking assets and market should be at least equal to the proportion of capital it enters, that is, 15%. From this perspective, China's financial industry has been open to the outside world for five years.

It must be pointed out that in China's financial market, foreign capital focuses on developing important financial regions and financial business fields in China, aiming at high-end customers who create more value. Therefore, the degree of financial openness and the depth of foreign investment in China may be greater than expected. I think we should look at this problem comprehensively and evaluate it from multiple angles. It is difficult to rely on only one or two data.

Now is the best time.

Reporter: China's financial industry is the last area that is fully open to the outside world. Judging from the current situation, after a five-year transition period, is China's financial system ready for full opening?

Hu Zuliu: Compared with the passive opening of Korea and Japan, our situation is much better. South Korea's opening up is due to the financial crisis and forced by the opening-up situation, while China's opening up is to fulfill its commitments when it entered the WTO and take the initiative to attack. Therefore, in the past five years, China has gradually promoted the reform of its financial system while gradually opening up.

In these five years, our financial reform, especially the shareholding system reform of state-owned commercial banks, has made great achievements. China Construction Bank and China Bank successfully went public, becoming large financial institutions with market value exceeding 1000 billion US dollars. Through the shareholding system reform and listing, they basically got rid of the big burden, returned to financial health and built an efficient platform.

In this case, we can now make use of the achievements brought by financial reform to expand opening up. The entry of the latest management concepts, products and technologies in the world can improve the level of competition. It is difficult to really understand the management level only through competition within the existing system. In particular, there is still a big gap between China's financial system and the international advanced system. Domestic financial institutions should learn from foreign countries and improve their management level.

Shen: At present, it can be seen that there are still some uncertainties in the opening policy of China's financial industry, but this is understandable. On the one hand, the reform of state-owned banks has not been completely completed. Although China Bank and China Construction Bank have been listed, this is only the first step. The reform of Agricultural Bank has not yet been carried out, and it will take time. On the other hand, China's financial industry is not open enough to the outside world, and the entry of domestic private capital into banks is very restricted. Private credit has not been legalized. Although some small loans have been tried out, the steps are very slow. I don't think it is possible to achieve complete opening up at once under the condition of insufficient opening up to the outside world.

If the bank restructuring is basically completed, everyone will have more confidence in the bank. At that time, we will open the inner door first, and then open the outer door wider. From this perspective, I think it will take a little time. The latest news is that the profit of CCB has dropped a lot, about 18%. If China's macro-economy fluctuates again in the future, will the profitability of banks stand the test? In other words, I think there are still some uncertain factors whether the imported strategic investors can really introduce foreign management technology, so as to improve the risk control level.

But opening up has not stopped, nor can it stop, and it must move forward. As for the pace of advancement, the government can control it to a great extent.

Xiao Geng: I agree with Hu Zuliu. Now is a good time for our financial industry to fully open to the outside world. There are both positive factors of financial system improvement brought by financial reform and favorable opportunities provided by macro-economy.

Is China's economy overheated? I don't think so. Our macroeconomic situation is very good. In this case, the demand for the financial industry in the whole economy is very strong, which also brings many good opportunities for the financial development of China. This is also an important reason why foreign banks and financial industry are very interested in China after China's financial opening up. For the China government, it is also necessary to improve the efficiency of various financial institutions by introducing foreign competitors. Although individual banks and financial institutions face the risk of bankruptcy in this case, the systemic risk of China's financial system is expected to be reduced. Reducing systemic risks by increasing individual risks should be the core part of the national financial opening-up strategy.

Opening up does not necessarily lead to financial risks.

Reporter: According to China's commitment to join the WTO, it is imperative for China's financial industry to open to the outside world in an all-round way. Now there is a worry in China that financial opening will endanger China's financial security. What do you think of this view?

Shen: Generally speaking, the possibility of financial crisis will definitely increase after opening up. When it comes to the risk of financial openness, it depends on how to understand it. For example, in the past everything was controlled by the state. Although financial institutions are inefficient, economic fluctuations are small. Such an economy looks less risky in the short term, but there is actually a risk of reform. Therefore, financial security is a relative concept, not to say that there is no risk in protection, but there must be risks in opening up. In fact, financial security is closely related to the financial risk management ability of the regulatory authorities. The supervision department should pay attention to the overall financial risk, not the risk of a single financial institution.

Hu Zuliu: Opening up will definitely intensify competition, but it can't be regarded as a scourge, because the fact is that we are at the commanding height and we have certain advantages. At the end of 2005, the total amount of foreign banks in China was very small. According to our forecast, within ten years, the share of foreign banks will increase by 10%, which is still very small, and the bulk is still in China.

Don't exaggerate the entry of foreign capital, which is exaggerated at present.

Ba Shusong: There is no necessary connection between financial openness and financial risks. We can't simply say that it is safer to be closed or open. We can find a large number of cases to prove that closed finance is unsafe.

Take ourselves as an example. Less openness makes local financial institutions have little external competition pressure. Is it safe without competitive pressure? For example, the four major state-owned banks have stripped off more than 2 trillion non-performing assets. What does more than 2 trillion non-performing assets mean? This means a waste of national savings. Banks did not use national savings in enterprises and regions that can better exert the potential of economic growth, and the potential of national economic growth as a whole did not come into play. Is this safe or not? If we learn good risk management experience through competition and openness, improve the whole operating mechanism and make the allocation of funds more efficient, then this openness is valuable.

Therefore, the key is to evaluate whether risk management and rational allocation of resources can be improved by introducing foreign capital.

What kind of financial opening strategy should be adopted?

Reporter: According to my understanding, the more important question at present is what kind of financial opening strategy we should adopt. What do experts think?

Zhan Xiangyang: I personally think that under the background of China's entry into WTO, the domestic market, including finance, must be opened to the outside world. This is the premise. There is absolutely no need to close the door because of the risks of opening up and introducing foreign capital. However, it is naive to ignore the reality of this risk and treat the problems of opening up and attracting investment with good wishes.

At present, the key issue is to control the "quantity" of foreign capital, especially for foreign-funded financial institutions, within the limits of not affecting national financial security. We should learn from western developed countries. Even in the United States and many European countries, which are considered to be the most open and fully market-oriented, the proportion of domestic and foreign banks is only about 10%. In addition, we should establish a correct concept of introducing foreign capital. It is impossible to stand still, but it is also impossible to rely too much on foreign capital.

Ba Shusong: The strategy of opening to the outside world is indeed very important. The Regulations on the Administration of Foreign Banks recently promulgated by China Banking Regulatory Commission is an exploration in this respect.

Last June, 165438+ 10, I visited the United States, and found that the control of foreign banks in the United States was much stricter than ours under the condition of abiding by WTO regulations. Since 199 1, there has been a bill on foreign banks in the United States. Foreign banks should do retail business in the United States and join deposit insurance companies, which is based on the principle of national treatment in WTO principles. However, to join the American Deposit Insurance Corporation, it must be a legal entity. In this way, you have to apply for a banking license from the relevant American institutions and inject capital to meet the capital adequacy requirements of the United States.

I once asked an official of the US General Administration of Monetary Supervision: Can you understand this as a kind of protection for the United States? He didn't answer directly. In fact, we mainly protect deposit insurance funds and local banking systems,' he said. If a poorly managed bank branch runs here and has problems, he will use the deposit insurance institution to help it. Under a huge multinational banking network, the operation of branches is obviously influenced by their head offices. However, it would be better if it is a subsidiary. Regulators can check your capital adequacy ratio, reserve adequacy ratio and other indicators. This objectively increases the cost of foreign capital entering the American market, and at the same time makes it difficult for many foreign banks to operate in the United States. Its practice not only follows the principles of WTO, but also objectively protects financial institutions in the United States. In fact, the same is true in Australia. Today, our regulations on the management of foreign banks are also looking for this balance.

Reporter: Another question is how to improve and strengthen financial supervision in the case of financial openness.

Shen: No matter whether finance is open to the outside world or open to the inside world, the regulatory agencies, regulatory techniques and macro-control policies of government departments should make corresponding changes. For example, diversified supervision modes, namely credit reporting agencies and deposit insurance companies, should be part of the whole supervision system; In terms of supervision technology, introduce transparent mechanism and put forward corrective measures in time; In macro-control, the government and the market should interact positively to help financial institutions resolve the risks brought by economic fluctuations.

In addition, the most important point is that financial institutions will go bankrupt. Bankruptcy is a loss to investors, but it is a protection to the whole economy. Up to now, no big country in the world, except a small country, has experienced great financial risks because it is controlled by others or its economic lifeline is controlled by others.

Xiao Geng: Financial regulators should consider, on the one hand, allowing domestic banks and foreign banks to be on the same starting line and the external environment should be the same; On the other hand, it should be considered that the supervision of state-owned banks and foreign banks should be treated equally. For example, state-owned banks generally do not go bankrupt. If they have problems, we can solve them through acquisition, merger or some other ways before. But if foreign banks are going bankrupt, do we have any countermeasures? Overseas financial institutions are not necessarily good financial institutions. How to deal with those foreign financial institutions with problems after opening up? I think these basic financial supervision issues are the most important.

Long-term goals and strategies of financial openness

Reporter: What long-term goals and strategies should China adhere to in its financial opening policy?

Hu Zuliu: In my opinion, China should walk on two legs. Internally, market-oriented and reduce the control of the state or government. Many institutions should be more privatized and attract private capital to participate; On the other hand, it is open to the outside world, allowing foreign investors to come to China to operate the financial industry and general business. These two aspects complement each other.

Ba Shusong: The near-term goal is to fully open to the outside world before the end of the year as planned. There is also a problem of comprehensively cleaning up and standardizing laws and regulations. Where many of our current management methods conflict with the WTO agreement, we should make some adaptive adjustments, such as national treatment. In addition, some super-national treatment should be withdrawn. Now some foreign banks actually enjoy super-national treatment.

In the long run, at least one thing is certain, that is, to establish an open and market-oriented financial system, not a regulated financial system or an backward financial system. The basic function of a market-oriented and competitive financial system is to allocate venture capital across time and regions. Whoever has high allocation efficiency will be competitive.

As long as each financial institution gives full play to its role and gives consumers better service, the efficiency of the whole financial market can be improved as a whole. This road is correct.

How do Chinese banks cope with the challenge of opening up?

Reporter: What I just said is some macro issues. From a microscopic point of view, how should China's financial institutions respond to the challenge of full opening?

Zhan Xiangyang: At present, with the entry of foreign strategic investors, the competition in the domestic financial market is rapidly evolving into the competition between different consortia of Chinese and foreign financial institutions, and the competitive pattern has undergone comprehensive and profound changes, which has developed from competition to competition.

The key for domestic commercial banks to deal with the opportunities and challenges brought by accelerating opening-up in the later transition period is to solve two problems well. First, the comprehensive operation of the financial industry should be able to make a breakthrough as soon as possible. International commercial banks have embarked on the road of comprehensive operation. With the entry of foreign banks, this comprehensive management model is also entering the China market, and China obviously can't stay out of it. Therefore, it is necessary to loosen China's banking industry, reduce institutional obstacles, and create a regulatory mechanism and legal policy environment that can promote financial innovation. The second is to solve the problem of talent shortage.

Domestic commercial banks, especially state-owned commercial banks, should attach importance to the talent problem as the most important strategic issue, and should allow domestic banks, especially state-owned banks, to gradually market their salary system, abandon the egalitarian salary system, and allow commercial banks to formulate competitive salary systems according to their own cost tolerance, so as to attract more domestic and foreign talents to stay in domestic banks and improve their international competitiveness.

Hu Zuliu: The advantages of foreign banks lie in their brands, services and products. Chinese banks should devote themselves to establishing their own brand image; In terms of service, it should be market-oriented and customer-oriented; And gradually adjust the business organization. At present, the proportion of retail business of China Bank is still very low, and its business is still very single.

Generally speaking, banks in China should have confidence in themselves and should not look down on themselves and say that they can't do anything. In competition, we can consider a variety of strategies, just like sports competitions. China Commercial Bank can not only consider strengthening physical fitness and winning some strength events, but also develop in small areas, such as diving and gymnastics, so as to establish its comparative advantage. CCB has gone abroad and acquired the Asian branch of Bank of America. I think this is a good trend and a good proof.

(Li Qian, an intern of our newspaper, also contributed) (P1180311)

■ background

Summary of WTO commitments

From the time of accession, foreign financial institutions are allowed to conduct foreign exchange business with all customers without geographical restrictions.

First, open RMB business in Shanghai, Shenzhen, Tianjin and Dalian; Guangzhou, Zhuhai, Qingdao, Nanjing and Wuhan will open within one year after China's accession to the WTO; Within two years, Jinan, Fuzhou, Chengdu and Chongqing will be opened; Within three years, Kunming, Beijing and Xiamen will be opened; Within four years, Shantou, Ningbo, Shenyang and Xi 'an will be opened; Remove geographical restrictions within five years.

Within two years after China's accession to the WTO, foreign-funded financial institutions are allowed to provide RMB business to China enterprises.

Within five years, foreign banks will be allowed complete market access, RMB retail business will be allowed, and national treatment will be enjoyed in designated areas.

Actual opening process

200 1, foreign exchange business was fully liberalized. In June, 2003, 65438+February, the RMB business customers of foreign banks expanded to Chinese enterprises. 13 cities have allowed foreign banks to operate RMB business.

Opening up beyond the commitment includes: increasing the proportion of individual foreign-funded Chinese banks from 15% to 20%. Reduce the level and quantity requirements for working capital of branches of foreign banks. Foreign banks are allowed to engage in derivatives business and overseas custody of foreign exchange funds of insurance companies.

By June 38, 2005+the end of February, the open area of RMB business had been expanded to 25 cities including Xi, Shenyang, Harbin, Changchun, Lanzhou, Yinchuan and Nanning, which were opened ahead of schedule. The target of RMB business has also expanded from foreign companies, foreigners and compatriots from Hong Kong, Macao and Taiwan to domestic enterprises, and 25 foreign banks have invested in 20 Chinese banks.