On March 18, William R. Rhodes, Senior Vice Chairman of Citibank, was present in Beijing yet again. Rhodes is so familiar with China that he can hardly remember how many times he has visited and how long he has stayed here. This time, he came to deliver a speech for the China Development Forum 2007.

Rhodes said he visits so frequently, not only because his company invests in China, but also because he likes China and its open market.

For him, coming to China is almost as welcoming as going to his New York City office.

During the forum, Rhodes suggested that while the Chinese economy is developing rapidly, China must attach importance to smooth liquidity of capital and manage investment by formulating proper monetary policies, with the aim of pushing more Chinese capital and companies into the global marketplace.

There are certainly many other international bankers who care about China as much as Rhodes, since their banks all have branches in the country. John Bond, former Chairman of the Hong Kong and Shanghai Banking Corp. (HSBC), and Joseph B. Eichenberger, Vice President of the Asian Development Bank, are both frequent guests of China.

According to the China Banking Regulatory Commission (CBRC), within the five years since China's WTO accession, operational entities opened by foreign banks increased from 190 to 312. While there have been several mergers within this group, the rapid increase of international bankers working in China is another sign of how important the market is becoming on the world stage.

Where the money grows

Establishment of locally incorporated foreign banks indicates that achievements are being made by China in honoring its WTO commitments. In April, four branches of foreign-funded banks will be locally incorporated and engaged in renminbi retail business, namely, HSBC Bank (China) Co. Ltd., Standard Chartered Bank (China) Ltd., Bank of East Asia (China) Ltd., and Citibank (China) Co. Ltd.

A news release by the CBRC shows that eight more overseas banks are preparing to register their local branches: JP Morgan Chase Bank, ABN AMRO, Hang Seng Bank, Mizuho Corporate Bank, DBS Bank, Bank of Tokyo-Mitsubishi UFJ Ltd., Wing Hang Bank and Overseas-Chinese Banking Corp. Besides these above, Nanyang Commercial Bank Ltd., CITIC Ka Wah Bank Ltd. and United Overseas Bank Ltd. have also filed applications. Most of the foreign banks have chosen to register their China subsidiaries in Beijing and Shanghai.

According to the Regulations on Administration of Foreign-Funded Banks, locally incorporated foreign banks may engage in all foreign and domestic currency business without quota limitations, including offering renminbi services to Chinese citizens. Foreign bank branches may conduct foreign exchange business and offer renminbi services to corporate and institutional clients. A foreign bank can determine the makeup of its company in the light of its business strategy on a voluntary commercial basis.

According to the Report on the Opening-up of the Chinese Banking Sector released by the CBRC in March, by the end of December 2006, China had registered 14 exclusively foreign-funded and Chinese-foreign joint venture banks, and these banks had opened 19 branches and sub-branches in the country. In addition, 74 foreign-funded banks have established 200 branches and 79 sub-branches in 25 Chinese cities, and 186 foreign-funded banks have set up 242 representative offices in 24 Chinese cities.