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China: Wealth Management

Banks, Stocks and Real Estate

If the government has wanted to retain wealth inside China, then it has been its own worst enemy for much of the last fifteen years. The litany of counter-productive policies is quite long, certainly including its protection of the domestic banking industry, causing lack of confidence among its potential customers, restrictive foreign exchange rules which have driven people to move money around outside the system, and ambivalent attitudes towards wealth as such which have driven people to locate wealth-generating operations in Hong Kong or other 'offshore' jurisdictions.

Things have gradually improved, although Chinese banks are still a black box despite flotations in Hong Kong, Shanghai and even London. China's entry into the WTO has been a major factor, with foreign banks being allowed to open up in China. The series of CEPA agreements between mainland China and Hong Kong has also been instrumental in encouraging development on the domestic banking sector.

Foreign banks are creating a semblance of normality in Chinese banking, but with that exception the government is both inscrutable and unpredictable, using tax policy in particular to forward its social and economic goals with very little regard for the creation of a stable investment market.

Banking deposits, real estate and securities investments are all subject to highly volatile and occasionally restrictive market conditions which certainly don't encourage wealthy Chinese to keep their money at home.

That said, there are more than 30 Chinese banks currently offering wealth management services, alongside a number of foreign banks, although they still don't really have a level playing field on which to compete.

 

 

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