Published by El Nuevo Herald on May 17, 2015
Certainly, China has clear economic advantages over the US and the rest of the world. Besides of the Chinese strategy of keeping its currency artificially undervalued to promote exports, the other strategy, not least, is to continue to increase its banking presence in the world in order to expand their operations, while weakening the already battered US dollar.
The Chinese bank ICBC is considered the world's largest in terms of market value and profitability. . With a market capitalization of $ 254 000 million, it exceeded in 2007 to Citigroup. It maintains more than 18,000 stalls and 106 branches in other countries, with 150 million customers. It has significant presence in Spain and Argentina, with 103 branches and 1,000,000 customers in the South American country since 2012.
Another Chinese bank, Bank of China, who is not a central bank, has a license to print money in Hong Kong and Macao.
The CCB Bank, one of the four largest in China, with more than 250,000 employees, has branches throughout Europe and New York. Belonging to the global ATM alliance, customers can make ATM withdrawals virtually worldwide.
China Minsheng Bank was the first private bank that opened in China. This bank, which is listed on the Stock Exchange of Hong Kong, was founded by an enterprising businesswoman, who also founded the first law firm and the first accounting office in that country.
China continues its banking expansion plan in all aspects. Last year five new private banks opened in China, and 11 Chinese and 20 foreign banks were registered in the Free Trade Zone of Shanghai, where the bank regulators have granted more autonomy to institutions. For example, there is avoiding meeting Chinese rule requiring banks to lend only up to 75% of bank deposits.
However, outside the free trade zone, bank requirements are more stringent, especially for foreign banks, which as a result only have a 1.7% share of that market.
In 2013, China increased the minimum capital requirement for a foreign bank to operate in the country. The increase amounted from 300 million yuan (renminbi) to 1,000 million. Similarly, China sets a limit for foreign shareholders in domestic banks: 25% for the total shares and 20% if a single investor.
Moreover, Chinese regulators require foreign banks a representative office two years before opening a branch in China, which could make only one at a time, when a new branch.
With so many requirements, foreign banks end up with a lower return on assets that Chinese banks, that is, 0.6% vs. 1.3% in 2013.
Opening an account in a Chinese bank is easy. Only require a passport, proof of residence of the local police station, a phone number and three yuan as a deposit. You may receive transfers from abroad.
In the US, banks have many regulations that hinder lending, and barely survive charging for check cashing services or debit card using another network.
The Chinese, however, only have many regulations for foreign banks, something which US hasn't to foreign banks, in other words, it is easier to Chinese opening a bank in the US than Americans opening a bank in China.
Because of the Chinese economy is decreasing in recent years, this country is already taking steps. Last month announced three new free trade zones. In this month they reduced again interest rates at 0.25%, something they have done three times in the last six months.
Currently in more than 70 countries, more than 900 financial institutions are doing business using the yuan, according to SWIFT (Society for Worldwide Interbank Financial Telecommunication)
It is projected that by 2020, trade with Asia will be 60% of the world market. Of course, a slowdown in Chinese credit could reduce demand in that country, which certainly would bring down the price of many raw materials.
But the question is: what measures might be taken to maintain US global hegemony of the dollar? Certainly, there are many, but time is short and you have to make decisions now.
As long as the TPP (Trans-Pacific Partnership) does not involve China, this would be a good start for 2016.
BENJAMIN F. DeYURRE
Economist and Journalist.
