China opens up to markets, but not too much: soon foreign banks will be able to increase their stake in joint ventures with local institutions, up to 49% of the capital (the limit currently imposed by the authorities is equal to 33%). A government statement made it official today, following recent negotiations with US diplomats.
An important sign of easing of economic regulation by Beijing, which will make the American authorities smile - albeit cautiously -.
According to analysts, this is a significant but not decisive gesture: keeping the control threshold below 50% will confirm - in any case - the balance centralization of power in the hands of local authorities. This was confirmed by Hong Jingping, an analyst at CMS, in a comment aimed at dampening enthusiasm: "It is an important gesture by the Chinese authorities to further open up their financial markets, but the new rules will not change the status quo in the structure of the intermediation industry, dominated by more than a hundred companies in which political connections are decisive”.
But a process of market opening can only be gradual and, however partial, this step also takes on a political value in the United States. In Washington, in the midst of the electoral campaign, the microscope analysis of foreign policy Barack Obama is constantly looking for weaknesses to exploit: the Republican candidate My Romney he has just recently criticized the presidency's foreign strategy, which is not sufficiently inclined to defend American interests.
The importance of the move, in the future, is not in question. Suffice it to say that since 2007, the year in which Beijing restored joint ventures with foreign capital, four key players in world finance have entered the local market: JpMorgan, Morgan Stanley, Credit Suisse Group AG and Deutsche Bank AG.
It is a market with enormous potential: Chinese investment banks are predominant in controlling stocks and bond issues, so much so that the Swiss UBS, in 2011, barely subscribed the 3,5% of equity operations, against the 10% of the insurance giant Ping An Insurance Group. There are therefore ample margins for foreign financial groups to exploit.
Beijing's choice should be read within a context of rapid evolution in economic policy which is involving the entire continent. In fact, throughout Asia, governments are conceding minimum wage increases of up to 10%, with prospects for others to rise in the next decade 10 or 15 percentage points.
But wages are not enough: the rebalancing of the trade balance also depends on monetary policy, and it is no coincidence that in recent weeks the government has announced the expansion of the fluctuation band of the local currency at 1% from the previous one 0,5%. All the bullish forecasts of the Chinese currency have been added to this data, which in the last two years has gained on average 4% on the greenback. The dirigiste management of the exchange rate that triggered the "currency war" is therefore giving way to a freer fluctuation of the Yuan, in keeping with an increasingly open market.
A further and significant signal can be read in the issue by the financial giant HSBC, of the first "dim sum bond” (Yuan-denominated bond) outside China, sold to London last April twenty for a modest amount (317 million dollars), compatible with the inauguration of the instrument.
The intent is clear: to transform the domestic currency into a global store of value, free to circulate on international lists, with important repercussions on the dynamics of international exchanges, not only financial, but also of goods. According to analysts, it is very unlikely that the Yuan will be able to outrun the strong in the future uptrends triggered by recent and forthcoming – as well as inevitable – economic policy measures.
The latter will have to homogenize the management regime of monetary and financial policies to an economic framework that will change ever more rapidly in the future, genetically transforming the Chinese economy from an export-focused economy to a domestic demand-based economy.
Everything indicates, therefore, a progressive erosion of the competitiveness of Asian exports, compatible with the development of a new middle class that is coveted by western industry. Witness the recent relocations of important European brands which, unlike in the past, set up in China not to sell in Europe, but to do business with the new middle classes of the East. A rapidly expanding social group: only in the country of the dragon, today it amounts to more than 150 million people and 55 million families which, according to a study by McKinsey & Co, they could become 280 in 2025.
