Magazine article American Banker

A Bank Window in the Great Wall; Zhou Zhenxing Promotes Chinese Business in the American Market

Magazine article American Banker

A Bank Window in the Great Wall; Zhou Zhenxing Promotes Chinese Business in the American Market

Article excerpt

A Bank Window In the Great Wall

Zhou Zhenxing promotes Chinese business in the American market.

ZHOU ZHENXING is having a hard time getting used to his one-hour-plus commute to Manhattan each morning. And he has yet to develop a taste for hamburgers.

But the hardest thing for the 56-year-old banker from the People's Republic of China (PRC) to get used to is the competition in the U.S. banking marketplace.

"Americans are open and straight-forward,' said Mr. Zhou, "and very clever and very competitive,' he added.

Zhou Zhenxing is director and general manager of the Bank of China's New York branch office, which opened four years ago. A central banker who also competes for commercial banking deals, Mr. Zhou admits that attracting business in one of the world's most competitive financial markets is not easy.

It is the laissez faire market that is the bank's biggest hurdle, not his government's bureaucratic restrictions.

Indeed, banking has been given a lead role in China's economic development. Banking is just as important there as it is in a capitalist country.

"It is indispensable to every branch of the economy. There is no difference because of a different social system,' said Mr. Zhou. "Banking has always been important in Marxist theory.'

For the Bank of China (BOC), breaking into banking in New York is competitive on several fronts. Major New York banks have desks that specialize in loans to U.S. companies doing business in the People's Republic, as well as offices there. Other U.S. and foreign banks cater to Chinese-Americans and have served New York's Chinatown for years.

But the Bank of China has the advantage of being the only bank authorized by the PRC government to trade in foreign exchange. This advantage is backed up with keen determination.

"We will expand our operation in New York,' said Mr. Zhou. "We need to work hard.'

After a 30-year impasse, diplomatic relations were normalized between the United States and the People's Republic of China in 1979. Before that, there were no commercial banking relations between the two countries.

"Normalization paved the way for direct commercial banking relations,' said a U.S. Treasury Department official.

Opening the Door

Recent liberalizations within China also give Mr. Zhou much more flexibility than ever before. In 1978, China's open door policy ended three decades of self sufficiency and isolation from the outside world.

Now the country's goal is "to speed up construction of the PRC,' said Mr. Zhou, referring to the country's push to modernize industry and agriculture. "Interconnection with foreign countries is important to economic growth and to raise the living standard of the people.'

Most important, the open door policy has decentralized the banking system in China. Until recently, the People's Bank, the central bank of China, was entirely subordinate to the Ministry of Finance. The central bank's main function was the distribution of funds to different sectors in the economy.

Now, in addition to the Bank of China, there are several separate banks within the People's Bank that specialize in areas such as agriculture and construction. While each subordinate bank heeds the direction of the People's Bank on monetary policy, interest rate, and foreign exchange control, the banks have some independence in their areas of specialty, said Mr. Zhou.

Because of these changes, Mr. Zhou doesn't feel hindered by government bureaucracy, but believes opportunity for banking is at an all time high, especially for the Bank of China.

As the specialized foreign exchange arm of China's central bank, the Bank of China has international duties much like those of the New York Federal Reserve Bank, the international arm of the Federal Reserve Board in Washington.

But despite liberalizations, there still are far more differences than analogies to be drawn between the Chinese and the U. …

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