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2017 | OriginalPaper | Chapter

8. Government Controlled Financial Institutions

Authors : Dominique De Rambures, Felipe Escobar Duenas

Published in: China’s Financial System

Publisher: Springer International Publishing

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Abstract

The emergence of financial markets is the latest step in the on-going policy of reform and opening up. The development of a financial asset market was the key prerequisite for the proper running of the other production factors’ markets: the market for goods and services as well as the labour market. But it was also the apex of the struggle between “reformists” supporting the growing implementation of market mechanisms, and “conservatives” supporting the role of the State. Economic reform is a mix of ideological postures. In fact, this typically Western-minded dichotomy is meaningless in China: most of the high-ranking Chinese Communist Party (CCP) officials are both “reformists” in the economic field and “conservatives” in the political sphere. Above all, the Chinese leaders have a very pragmatic approach: what makes the economic system work best? What are the economic reforms compatible with the Party-State’s leadership?

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Footnotes
1
According to the “lock up” clause, the shareholders are prohibited from selling their shares within a given period of time (from six months to three years), to prevent a fall in the stock price shortly after the issue; the “green shoe” clause authorizes an increase of the transaction amount in case the issue is oversubscribed.
 
2
Liquidity risk arises when either cash or securities are no longer available; the counterparty risk when one of the two deal makers failed in the course of the transaction and cannot meet its side of the deal.
 
3
Financial Times/Goldman Sachs, 2014.
 
4
Formed in 1999 after the same model, GITIC (Guangdong International Trust & Investment Corp.) based in Guangzhou (Canton) was closed following huge losses on the London futures market.
 
5
Following the 2015 crash of the Chinese stock market, both funds are forbidden to sell off their shares.
 
6
A shares are yuan denominated shares sold to the Chinese; B shares used to be yuan denominated shares which could paid in foreign currency; C shares are the Blue Chips quoted on a foreign exchange, mostly on the New York Stock Exchange.
 
7
Prime Capital is headed by a former futures dealer from the private equity fund Yangjin.
 
8
Zhu Xiao chuan, the current PBOC governor, used to be the head of SAFE.
 
9
Along with a 10% shareholding by Warren Buffett’s Berkshire Hathaway fund.
 
10
The car insurance department of PICC Property & Casualty Co. was providing 80% of the company’s profits. From then on, foreign companies have access to the non-life insurance sector, but only within the framework of a 49% joint venture with a Chinese partner.
 
11
The main shareholder is Shan Wei jian, a former TPG officer.
 
Metadata
Title
Government Controlled Financial Institutions
Authors
Dominique De Rambures
Felipe Escobar Duenas
Copyright Year
2017
Book
China’s Financial System

Print ISBN: 978-3-319-40450-9

Electronic ISBN: 978-3-319-40451-6

Copyright Year: 2017

DOI
https://doi.org/10.1007/978-3-319-40451-6_8