The China Venture

However, the characteristics of the mainland’s banking system have changed rapidly in only
five years. Nevertheless, it is essential not to leave out a basic overview of the structure of the
banking system in China. Therefore Figure 2-3 shows the system as it is structured until now.
At the beginning of the economic reform in the early eighties four specialised banks have
been established: Industrial and Commercial Bank of China (ICBC), Bank of China (BOC),
China Construction Bank (CCB, before March 26, 1996, it was called „People’s Construction
Bank of China“) and Agricultural Bank of China (ABC). Their major task is to grant policy
loans to the state -owned enterprises (SOEs) of a specific economic sector. The areas of the
four specialised banks provides an overview of their areas of specialty.
Establishment Head office Specialised areas
ICBC 1984 Beijing Handling industrial and commercial credits,
loans and savings deposits
BOC Originally in 1912 Shanghai since Handling foreign exchange and foreign
1994
trade
CCB 1980s Beijing Lending long term financing for construction
projects across the industries
ABC 1980s Beijing Handling rural financial business
TABLE 2-1: The areas of the four specialised banks 32
In order to ease the financing pressure on the commercial banks and allow increased
transparency and accountability in lending for large state-sponsored projects, three policy
banks have been established in the middle of 1990s: The State Development Bank, the
Agricultural Development Bank and the Ex- and Import Bank of China 33 . They particularly
provide long-term financing of important state projects. Nine banks, led by the Bank of
Communications (Bocom), formed commercial banks, as the separation of the central and
commercial banking functions began in 1987. The Bocom, which was founded in 1908, has
its headquarter in Shanghai. Its branch in Hong Kong is one of the ten biggest banks there. It’s
also the first bank in China in form of corporation with 50% state share of its registered
capital. The other important commercial banks set up during this period include CITIC
Industrial Bank, China Everbright Bank, China Investment Bank and China Merchants Bank
as well as some regional development banks like Pudong Development Bank in Shanghai.
Nearly all large Chinese banks are located in Shanghai. Private commercial banks are not
typical for China until now, but the increasing emergence of such banks is quite obvious for
the next future. China Minsheng Banking Corp. was China’s first privately owned bank,
32 Source: Hannan, 1995, p. 51-52.
33 Islam/Chowdhury, 1997, p. 279.
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