The Chinese Financial Conglomerate and Its Company Law Implications

Abstract

In the past decade, China took the general position of separating different

financial businesses, and putting them under segregated supervision. Nonetheless, recent amendments to the Commercial Bank Law and Securities Law seemed to open the door for financial conglomerate operations. Two models have been considered in particular, namely the universal bank model, prevailing in Europe, and the financial holding company (FHC) model in the US. Through theoretic analysis and review of the latest development, this paper suggests that at Chinas current stage neither the universal bank nor the FHC model should be embraced

hastily without a critical eye. While the FHC seems a likely choice, it contains drawbacks and unfitness that merit discussion. Transforming State Owned Commercial Banks (SOCB) to public-held and truly independent entities shall certainly be a prerequisite and propellant to any meaningful structural reform, including the financial conglomerate issue.