China begins introduction of private banks

13 Mar

In an announcement on Tuesday, China announced plans to approve five completely privately owned banks to begin operations within the country.

As reported on by the BBC and the Financial Times, the five banks will be situated in the Tianjin, Shanghai, Zhejiang and Guangdong provinces, an eastern bias towards the presently more developed region of China.

The banks have been chosen individually by the state, and will be under the exact same regulations as their state-owned competitors. These banks include, the already Chinese based Alibaba and Tencent.

This comes after recent claims that the current state owned banking industry is biased towards lending funds to only state owned firms and projects. This opening up to private banks is a strategy to create more competition, bringing a far more competitive and responsive Chinese economy in the future.

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