The Institute of International Finance has urged Chinese authorities to enhance regulatory transparency and uniformity in the financial sector to encourage foreign lenders to expand on the mainland, the Hong Kong Economic Journal reported Monday, citing an interview with the organization’s chief representative for Asia Pacific Dicky Yip.
Yip said senior management of foreign banks often find it hard to gain fair treatment from Chinese regulators, particularly in product development and sales.
Local lenders, for example, can create and sell different kinds of innovative products as they are only required to report to the regulators without going through an approval process. However, as there are no clear regulatory guidelines in the market, foreign banks are usually hesitant to launch new products.
Yip expects foreign lenders to continue to take a cautious approach in their mainland operations, although they are not planning to give up on the country which is set to become the world’s largest economy.
Lenders are also worried over rising debts amid China’s slowing economy, but regulatory transparency is their immediate concern, he said.
As the country reforms the ownership structure of state-backed enterprises, foreign banks and institutions are looking for opportunities in invest in such corporations, Yip said.
Washington, D.C.-based Institute of International Finance is a global association of financial institutions that conducts research on financial issues and policies.
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