WASHINGTON (XFN-ASIA) - New US Treasury Secretary Henry Paulson will lobby for more foreign competition against China's banks when he visits the country next month, an official said.
Treasury spokesman Tony Fratto noted that China, under its commitments as a World Trade Organization member, has until the end of the year to unveil proposals on reform of its heavily protected financial sector.
'His (Paulson's) view is that it is in countries' interest to open up their financial sector,' Fratto told reporters.
The spokesman declined to say when the former Goldman Sachs boss would head to China, but confirmed that his trip would include a stop in Singapore for a meeting of Group of Seven finance ministers.
The G7 ministers are set to meet on the margins of the annual meetings of the International Monetary Fund and World Bank, which this year takes place in Singapore on Sept 19-20.
Paulson is likely to echo the message of his predecessor John Snow, who on a tour of China last October said that Beijing was offering 'encouraging' noises about the need to bring in outside expertise for its financial sector.
The Treasury is pressing for foreign banks, insurers and brokers to be allowed to open up multiple branches in China, and for caps on foreign ownership of Chinese financial institutions to be scrapped.
Chinese banks, while saddled with bad loans, are also groaning with cash from companies' export earnings. That cash, experts argue, gets directed all too often to unproductive domestic industries.
'The pace of change in international finance, especially in recent years, it's just going at light speed. For countries to try to develop a home-grown banking system is difficult, inefficient and time-consuming,' Fratto said.
'It makes a great deal of sense that if you can welcome in world-class financial services overnight, that would have an impact on your economy and help to better allocate capital in your domestic economy,' he said.
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