4 - Central government control over foreign banks’ customers in China

Abstract

The main customers for foreign banks in China were foreign enterprises or multinational corporations (MNCs). As foreign direct investment (FDI) and the presence of foreign enterprises are closely related, FDI would seem to be a reasonable proxy for foreign enterprises' activity. From 1992, governments in developing Asian countries began to adopt policies to increase their economic growth. To promote economic development they competed for FDI, by means of preferential policies. This chapter examines the central government control over customers of foreign banks, i.e. foreign enterprises or foreign MNCs, in China between 1979 and 2004, and emphasises its importance to the development of foreign enterprises. The given study assumed that the development of foreign banks in China was mainly to follow their customers, i.e. foreign enterprises. The development of foreign enterprises therefore has an important influence on the development of foreign banks.