China opens securities industry, within limits


Richard Moore

Original source URL:

China opens securities industry


WASHINGTON, May 23 China has agreed to let U.S. firms enter its securities 
industry, U.S. Treasury Secretary Henry Paulson said in Washington Wednesday.

Under an agreement worked out during a "strategic economic dialogue" led by 
Paulson and Chinese Vice Premier Wu Yi, China says that starting in July firms 
such as Merrill Lynch & Co. and Citigroup Inc. will be allowed to invest in 
Chinese securities firms, and establish joint ventures with them. This will 
create opportunities for U.S. firms and provide new competition and expertise in
the Chinese securities industry, Paulson said.

China refused, however, to lift its ceiling on foreign ownership of Chinese 
banks from 25 percent.

China did agree to let qualified foreign institutional investors buy up to $30 
billion in stocks usually reserved for domestic buyers, Paulson said. The limit 
currently is $10 billion.

In addition, China agrees to immediately let foreign-invested banks offer 
yuan-denominated credit and debit cards in China. This will let U.S. banks 
compete with Chinese banks that offer these services, Paulson said.

During the talks, Paulson repeated his call for greater appreciation in the 
yuan. U.S. manufacturers believe China is undervaluing its currency, making 
Chinese goods cheaper in the United States and U.S. goods more expensive in 

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