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China may ease limits on foreign banks
By Michele Batchelor/Karen Gullo (Bloomberg News)
Updated: 2005-09-14 07:57

The chairman of Standard Chartered, Bryan Sanderson, said last Tuesday, when the lender agreed to pay $123 million for 19.99 percent of newly set-up Bohai Bank, that he would like to see the pace of liberalization accelerated in China. He also said "a minority stake is fine, but it would be better if it was bigger."

After joining the WTO in December 2001, China pledged to gradually allow foreign lenders more access to its banking industry. It has also brought forward some commitments, including last year allowing foreign banks to start doing yuan business with local companies in Xi'an and Beijing, a year ahead of schedule.

Foreign direct investment in China, the world's second-largest recipient of funds from abroad, fell 3 percent in the first eight months of the year.

Actual foreign investment fell to $38 billion, the Ministry of Commerce said on its Web site. Contracted foreign investment, or investment pledged but not yet used, rose 21 percent from a year earlier to $112.7 billion as companies including ABB said they plan to build more factories.

China has attracted $590 billion of overseas investment since 1978 as companies including Ericsson and Quanta Computer moved production to the nation to take advantage of low wages.

The fall in investment, triggered by the end of a three-year expansion by Asian technology companies, may continue at least until next year, analysts said.
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