Wall Street, banks and insurers got a boost from the Obama administration this week in their drawn-out effort to get Beijing to open up China's countryside to U.S. financial institutions. While it was just a gentle nudge to visiting Chinese President Hu Jintao, officials said that they will follow up in spring talks that are aimed at bringing western-style banking and insurance to China. [See photos of the Obamas abroad.]
Financial industry officials say that expanding to China could result in the creation of high-paying American jobs and boost China's consumption and their government's effort to switch to a consumer-based economy, like the rest of the world. And the market could be even bigger: The Chinese save about half of their paychecks and have little access to loans and financial tools Americans take for granted. Shifting to a consumer-based economy, said industry officials, would open a whole new buying trend by the Chinese, helping capital markets and American companies.
Leading the private effort to open up the Chinese markets is a coalition of financial industry trade groups called Engage China. Shortly before the Obama-Hu summit, the group sent a letter to the White House that explained their position.
"As you meet with President Hu, we respectfully urge you to focus on greater market-opening reforms in China's financial services sector. Such reform and modernization will help China achieve its economic goals, including building a more services-based, consumer-driven economy," wrote the 12 coalition members led by the Financial Services Forum headed by President Robert Nichols. "Moreover," they added, "fair and competitive access to China's fast-growing middle class and business sector represents an enormous commercial opportunity for American manufacturers, farmers and ranchers, and service providers, with major implications for U.S. economic growth." [See photos from the Chinese state dinner.]
The coalition isn't just talking. Members are traveling to China this weekend to personally press for better access to Chinese capital markets. They plan to meet with Chinese government and business leaders in Beijing, Shanghai, and Hong Kong, Monday-Friday next week. They also plan to encourage continued financial sector reforms in China, encourage the Strategic & Economic Dialogue process, and work to strengthen economic ties between the two nations, said the official.
In a preview of the trip for Whispers, the group said: "While in China, the coalition members will reinforce the view that accelerated progress toward greater openness and modernization of China's financial sector is the key to more diversified and sustainable long-term growth of China's economy and to resolving certain outstanding issues that have complicated the U.S.-China economic relationship, such as the trade imbalance and China's currency policy. As we strive to achieve our goals of strong, sustainable job growth, and a doubling of U.S. exports within the next five years, productive engagement with China is essential. China's growing middle class represents many opportunities to U.S. By providing the financial products and services that China's citizens and businesses need to save, invest, insure against risk, and consume at higher levels, U.S. financial institutions are helping to expand a vast new market for American-made products and help create jobs for American workers."
Nichols, meanwhile, plans to deliver a speech in Beijing Wednesday that will suggest ways to build on the U.S.-Chinese economic partnership.