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The Challenges Facing China’s Financial Services Industry

In: China and the Global Business Revolution

Author

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  • Wu Qing

    (The Judge Institute of Management Studies)

Abstract

The winter of 1999 brought two events, which will deeply affect the Chinese financial services industry in the new millennium. One was the China-US WTO Agreement, which the US government expects will ‘dramatically expand’ its access (as well as access for the EU and the other main players in the world economy) to ‘a market of over a billion people’1 (Clinton, 2000). The other was the newly enacted Financial Services Modernization Act of 1999 (Gramm-Leach-Bliley Act (GLB)), which will open the door to the creation of a ‘financial supermarket’. Simultaneously, the USA abolished the Glass-Steagall Act that had influenced the financial services industry in the US and some other parts of the world for 65 years. The former means that the infant Chinese financial services industry has to face global competition in the context of internationally-determined rules of the game. The latter signals that the world’s biggest financial services suppliers, the US financial institutions, are comprehensively deregulated. The dominant position of the financial giants from the advanced economies will be further enhanced. This will significantly alter the structure of the industry as well as the nature of financial services regulation across the world. In the new context of globalization, not only will the competitiveness of China’s financial services industry be challenged, but the very safety of the financial system will be threatened.

Suggested Citation

  • Wu Qing, 2001. "The Challenges Facing China’s Financial Services Industry," Palgrave Macmillan Books, in: China and the Global Business Revolution, chapter 12, pages 813-837, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-52410-1_12
    DOI: 10.1057/9780230524101_12
    as

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