China\'s 2001 Accession to the World Trade

¶ … China's 2001 accession to the World Trade Organization has been regarded one of the country's most significant moves as far as its integration with the global economy is concerned. According to the author of the article I analyze in this text, one of the most significant consequences of the said accession "was the transformation of China's financial sector." From the onset, the author of this article correctly points out that over the years; the need for an overhaul of the Chinese financial sector was rather obvious. This is more so the case given the inefficient way in which loans were being extended by lenders. Indeed, the only way China could save its financial system from imminent collapse or stalling was through the opening up of its banking sector. In the words of the author, "immediately upon accession to the WTO, China's banking sector began to open to foreign banks." HSBC saw this as an opportunity to enhance its presence in the Chinese market. As the author points out, based on its long history in the region, HSBC was best placed to exploit the opportunities the Chinese market presented.

The author in this case also correctly points out that the relevance of China as an investment destination cannot be overstated. To begin with, China is now regarded the second largest economy in the world after having surpassed Japan approximately three years ago. The Chinese economy has also been experiencing rapid growth -- growth that the author attributes to a government funded real-estate boom. It is important to note that given this fast pace of growth, there is a need for China to embrace policies that are more progressive and friendly to the prevailing changes. Other factors that make China an attractive investment destination most particularly for firms in the banking sector include but they are not limited to the country's vast population with a middle class said to be mushrooming, and huge savings rates.

The success of HSBC in China is largely founded on a number of factors. The author identifies two of these. The first is competition. In the words of the author, "HSBC competitors are aggressively seeking opportunities in China, and HBSC has to constantly work to maintain and expand its market position." How HSBC responds and reacts to this onslaught from competitors will determine how well it does in the Chinese market. Secondly, HSBC's success going forward as the author further points out will be dependent on how it responds to opportunities it identifies in the world's other emerging markets. The other factors on which the future of HSBC in China is largely hinged on include but they are not limited to the policies adopted by the Chinese government going forward, and how prospective customers respond to the bank's entry into the market. Currently, HSBC regards itself the largest of all the foreign banks in China. Further, in comparison to the other foreign banks that have since set up base in China, HSBC according to the author offers the greatest number of banking services. It would therefore be prudent to observe that all things held constant, HSBC stands the greatest chance of benefiting from the lucrative Chinese market.