Treasury Secretary Henry Paulson will lobby for more foreign competition against
China's cossetted banks when he
visits the country next month, an official said.
Pedestrians walk past billboards of foreign banks in a street
in Shanghai in this October 15, 2004 file photo. China's banking
regulator says nine Chinese banks introduced foreign strategic
investors and another nine are in negotiation with potential foreign
spokesman Tony Fratto noted that China, under its commitments as a World
Trade Organisation member, has until the end of the year to unveil
proposals on reform of its heavily protected financial sector.
"His (Paulson's) view is that it is in countries' interest to open up
their financial sector," Fratto told reporters.
The spokesman declined to say when the former Goldman Sachs boss would
head to China, but confirmed that his trip would include a stop in
Singapore for a meeting of Group of Seven finance ministers.
The G7 ministers are set to meet on the margins of the annual meetings
of the International Monetary Fund and World Bank, which this year take
place in Singapore on September 19-20.
Paulson is likely to echo the message of his predecessor John Snow, who
on a tour of China last October said that Beijing was offering
"encouraging" noises about the need to bring in outside expertise for its
The Treasury is pressing for foreign banks, insurers and brokers to be
allowed to open up multiple branches in China, and for caps on foreign
ownership of Chinese financial institutions to be scrapped.
"Longer term we all want the renminbi (yuan) to be traded in a more
competitive, open marketplace," Paulson told the CNBC network on August
"To get there we need their financial system to be open and open to
competition and then of course longer term, China needs to make the
transition from an export-driven economy to one that consumes more," he
The Treasury spokesman said that Paulson "brings a wealth of
experience" to the financial debate, having been the chief executive of
Goldman Sachs before he replaced Snow in July.
Paulson knows China as well as any holder of his office, having visited
the country upwards of 60 times since 1990 when he was at the Wall Street
Along with retail banking giants such as Citigroup, investment banks
like Goldman Sachs are keen to grab a bigger slice of China's financial
Chinese banks, while saddled with bad
loans, are also groaning with cash from companies' export
earnings. That cash, experts argue, gets directed all too often to
unproductive domestic industries.
"The pace of change in international finance, especially in recent
years, it's just going at light speed. For countries to try to develop a
home-grown banking system is difficult, inefficient and time-consuming,"
"It makes a great deal of sense that if you can welcome in world-class
financial services overnight, that would have an impact on your economy
and help to better allocate capital in your domestic economy," he said.