In November 2017, the Chinese Vice Finance Minister announced the government's intention to remove the limits on foreign ownship in commercial banks, asset management firms, securities firms, and...Show moreIn November 2017, the Chinese Vice Finance Minister announced the government's intention to remove the limits on foreign ownship in commercial banks, asset management firms, securities firms, and fund management firms. A few months later, the Governor of the People's Bank of China offered what can be considered a timeline for implementation. Although subsequent information has been very scarce and no specific rules have been issued, yet, the author's interest was so much piqued that he has written a thesis that speculates about the government's motivations to decide in this manner. With speculation as the driving force, in order to establish what foreign ownership may mean for a national banking sector in general and the Chinese one in particular, the author presents an overview of seminal research into this field as it has been published in the first decade of the century and has not been published since. Comparative studies on countries that show similarities with China also are presented. The Chinese banking sector, much like the political system, is like a black box. Few studies have appeared that describe the state of the financial sector in a non-partisan way. Nonetheless, the author has identified a number of existing problems that might be assuaged by allowing foreign ownership, by testing them against a number of hypotheses that have been distilled from the general literature. Again, speculation is the defining word, but on the basis of rational arguments, a number of very convincing reasons are presented why the Chinese government may decide to open up its financial sector to outside ownership.Show less
