Exchange rate as of Oct. 5, 2008 1 US dollar = 6.8575 yuan (down from 1 US dollar = 8.7 yuan in 1994)The central bank: The People’s Bank of China
The regulatory authorities:
China Banking Regulatory Commission (CBRC), China Securities Regulatory Commission (CSRC), China Insurance Regulatory Commission (CIRC)
Stock market:
Shanghai Stock Exchange, Shenzhen Stock Exchange, Hong Kong Exchange
Foreign Investment:
China’s banking system is highly regulated and relatively underdeveloped. Four big state-owned banks include Bank of China, China Construction Bank, Agricultural Bank of China and Industrial and Commercial Bank of China. China has been opening up its financial market from the end of 2006 to fullfill its commitment to the WTO. Foreign financial institutions have been permitted to provide foreign currency services to Chinese enterprises and individuals, and have been permitted to provide local currency business to all Chinese clients since then. However, according to the Catalogue for the Guidance of Foreign Investment Industries, banking and insurance industries are still in the restricted category, meaning high qualification, capital requirement and conditioned company structures to participate in the market.
Due to tight foreign exchange controls, Chinese domestic investors are not allowed to invest in the overseas capital market directly. Instead, Qualified Domestic Institutional Investor (QDII) has been introduced to allow investors to invest in foreign securities markets via certain fund management institutions, insurance companies, securities companies and other assets management institutions which have been approved by CSRC. Qualified Foreign Institutional Investor (QFII) is the opposite investment scheme to allow foreign investors to invest in China’s captial market.
Fundamentals that are posing challenges to the economy and the financial system year to date:
Exports under pressure due to the global slowdown, appreciation of RMB, and increasing commodity and labor costs
Domestic investment by corporate slowing down
Real estate developers facing weak property sales, falling housing prices and tightened financing conditions
If you have any questions regarding the above, please feel free to contact me at fangf@u.washington.edu!
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