China regulation

By Liang Xiaozhong of the China Banking Regulatory Commission

Internet Finance is a term drawing massive attention from cities to villages across China. By broad definition, internet finance – which includes Peer-to-Peer (P2P) lending and crowd funding – includes any organisation that extends their financial applications to the public over internet or any other IP network. Heated discussion surrounds the question of whether internet finance may replace conventional banking in China, unlike in many countries where it has undergone an evolution alongside conventional banking.

To see the future of this competition, we first need to understand the fundamental differences between them. 

Imagine you are bidding for an item on eBay, and the lowest bid wins while the highest bid loses. Impossible? That is what is happening in the world of Chinese initial public offerings. 

It’s tough being China’s top regulator. As if trying to rein in the country’s shadow banking system and dubious wealth management industry wasn’t enough, Xiao Gang, the new chairman of the China Securities Regulatory Commission, now has to fend off personal comments about his appearance. 

There are several things you might associate with Bitcoin: freedom from central banks; criminal activity; boom and bust; the Winklevii. How about China?

Although most Bitcoin enthusiasts and pioneers are US based, China has emerged as a big centre of Bitcoin users. The question is: why, and will the authorities allow it to flourish? 

French food products group Danone has said it will cut prices of its infant formula products in China by up to 20 per cent, after the Chinese government launched an investigation into possible price-fixing and anti-competitive practices by foreign manufacturers.

But the government crack-down is unlikely to restore confidence in domestic Chinese brands of infant formula, a commerce ministry official warns. 

Filial piety has been a central pillar of the Chinese moral code for centuries. But Chinese lawmakers and judges seem to believe ethic principles alone are not quite enough to ensure the country’s elderly are properly taken care of.

This week, a court in eastern China ruled that a woman surnamed Zhu had the duty not only to give financial support to her 77-year-old mother (pictured) but also to visit her at least once every two months. 

The China Food and Drug Administration has promised to get tough on health foods before, with little result. This time, it seems, it is serious.

The recently-reformed CFDA has promised a five-month campaign from May to September to crack down on illegal activity in the health food industry, part of a broader drive by authorities to stamp out corruption and unethical business practices. 

When might the Chinese authorities lift the ban on domestic IPOs imposed last year to accelerate reforms and stabilise a weak stock market?

With the wonderful benefit of hindsight, it wasn’t surprising that predictions that the October suspension might be lifted in March proved wrong. After all, Beijing was in the throes of its leadership change.

But now that the new team is in place, there are signs that officials are preparing the ground for a resumption – albeit with tougher regulatory standards for issuers and sponsors alike. 

Chinese people are used to hearing about the extraordinary benefits enjoyed by employees of big state-owned enterprises. But the size and scope of such benefits still delivered a shock when the National Audit Office released its annual reports on 10 SOEs and further exposed the extent of the problem.

Among the 10 were China Mobile, China Huaneng Group, China Publishing Group and other SOEs and, notably, their subsidiaries. They were found to have violated financial regulations by offering staff a variety of “invisible benefits”, according to audit reports for 2012 on the NAO’s website. 

In the pantheon of financial news, China’s decision to open its interbank bond market to foreign investors may seem a small item. But the announcement, made on Wednesday, is a big one for two reasons.

First, it gives foreign institutions access to a major asset class. Second, its timing signifies that China’s financial reform train is still very much in motion just a few days after the dust finally settled on the country’s leadership reshuffle. 

For the tens of millions of Chinese who will journey back home next month for the Chinese New Year, fighting over the limited supply of train tickets is nothing new. But this year, the fight has moved online, and somewhat controversially. 

By Ben Simpfendorfer of Silk Road Associates

The fate of China and the world’s multinationals are bound tightly together, both having benefited from the spectacular growth in global trade and investment over the past two decades.

So it’s no surprise then that the global crisis has challenged that once cozy relationship: China is rethinking its open-door policy to foreign firms, while the world’s multinationals are equally discovering opportunities in India, Brazil, and other fast growing emerging markets. 

China Development Bank, the state-owned lender known for funding infrastructure projects like the Three Gorges Dam, is providing more than $1bn to help small Chinese companies leave the US stock market, according to Bloomberg.

Beyondbrics can’t help but wonder whether CDB’s foray into the US has something to do with the political battle between Washington and Beijing over cross-border regulation of accounting firms. 

Others may worry that the Chinese economy is on rocky foundations, but not Deloitte Touche Tohmatsu, which has decided to invest another $160m in the mainland over the next three years – notwithstanding concern about economic growth, or Beijing’s plans to localise the foreign auditing firms