Citibank was the first U.S. bank to establish operations in China when it opened a branch in Shanghai in 1902. From the early 1940s until 1984, Citibank was absent from China, but since 1984 it had gradually re-established an active presence. In 1997, Citibank had reached a crossroads. It had to decide how best to participate in the rapid growth of the Chinese economy and the huge inflow of foreign direct investment. Citibank had many competitive .....more

This note examines the Chinese government's reforms of the financial services sector as of 1997. Regulation of state-owned enterprises (SOE) was being altered so as to make the SOEs financially accountable, and this involved the reduction of subsidies that had been offered in the form of cheap loans from state banks. China wished to join the World Trade Organization, but this would require removal of restrictions on foreign financial institutions, .....more