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The existence of an uncovered liability has historically benefited foreign banks and lead currencies. Using the case of China's efforts to fund its foreign exchange needs by exploiting loopholes in the international financial architecture, the paper examines whether using state-owned settlement banks as a means of intermediating a specialised 'non-deliverable' financial asset in offshore markets can substitute the institutional and technical prerequisites that developing economies typically lack. The findings show that while offshore money markets can reduce US dollar dependency in areas such as trade invoicing that do not depend on currency delivery, increasing the offshore holdings of RMB is more challenging. The reasons for this are to be found in the way the governance, geographic and credit generating limitations of state settlement banks reinforce the constraints imposed by the uncovered liability problem. The findings distinguish the historical evolution of the RMB's offshore use from other offshore markets and reinforce the impossibility of separating issues related to trade infrastructures from those related to the structure of the international financial system. [ABSTRACT FROM AUTHOR]

International embargos and the withdrawal of Soviet technical expertise had by the early 1960s effectively engrained China's approach to energy and technical self-sufficiency. Chinese officials cited reasons similar to those advanced by Edith Penrose in her critique of the international oil companies' (IOC's) investments. Drawing on Penrose's approach, this article shows that although self-sufficiency led to significant progress in primary capacity, self-sufficiency had to be reconciled with increasing demand for more complex petrochemicals. Modernisation increased China's reliance on the IOC's technology and reduced pricing independence, confirming a historical regularity in the market imperfections underpinning the power of the IOCs. [ABSTRACT FROM AUTHOR]

Although it is commonly assumed that there are no precedents against which to benchmark Renminbi (RMB), this study argues that the People’s Republic of China (PRC) own development experience provides a useful perspective on the internationalisation debate. This study indicates that lessons can be learnt from both the successes and the shortcomings of efforts to internationalise the RMB in the 1970s. During this period, state-owned banks in Hong Kong played a central role in mobilising finance for foreign trade. Access to Hong Kong’s financial institutions allowed the PRC to maximise international trade receipts while minimising the risk of undue swings in capital flows. This study shows that although China no longer faces foreign exchange scarcity, economic reforms have not yet resolved vulnerabilities in China’s financial institutions. As a consequence, Hong Kong has retained its role in mitigating the risks of internationalisation and as a globalising force for China’s banking sector more generally. [ABSTRACT FROM AUTHOR]

Corporate governance is now a key concern in China's banking sector. Its importance is related to the important policy questions of how to foster economic growth without increasing inflation in an environment where monetary guidance does not function in a conventional manner and there exist few constraints on bank lending. Under such an environment top-down best practice models offer considerable appeal, but their implementation in China's banking sector suffers from a reform deficit. In this context, this study argues that innovative reforms that draw on existing institutions and expertise such as the reform of the China Postal and Savings Bank and the relaxation of restrictions on foreign banks in the rural sector indicate a unique and policy-driven response to this conundrum. Their advantage is that they provide the state with a ready-made platform to influence economic activity in the rural economy. [ABSTRACT FROM PUBLISHER]

Summary: China’s state-owned banks have demonstrated a tremendous capacity for change, but their implications for development policy are often unclear. The paper examines why the pre-reform banking system based on moral compromise almost seamlessly changed to one based on self-advancement. Focusing on a period when resources were desperately short, the paper argues that China’s great advantage has been Hong Kong and the safe access to international markets it provided. Consequently China’s leadership is more familiar with international markets than is often assumed, and although capitalism is no longer exceptional, access to formal institutions continues to be a core development priority in achieving modernization. [ABSTRACT FROM AUTHOR]

Summary: This paper proposes a micro-level framework to account for how firms in developing economies overcome domestic institutional constraints. It illustrates that the mechanisms enabling those firms to benefit from financial globalization are more complex than the “direct” financial channels outlined in the neo-classical approach. China provides an important example in this context, as its capital market liberalization has been limited and neither the legal nor the financial system is well developed. Yet micro-level evidence from China’s internationally listed enterprises indicates that innovative firms can overcome institutional thresholds, secure access to international capital, and benefit and learn from international capital markets. This can in turn induce market-level improvements through regulatory competition and demand for a more standardized system of economic regulation. [Copyright &y& Elsevier]

The objective of this paper is to gauge the extent to which Chinese state-owned commercial banks are converging with international best banking and corporate governance practices, with a particular focus on the policy of international listing given its recent popularity. Drawing on the international listings of China's state-owned banks on the Hong Kong stock market, the paper finds that formal convergence is possible to achieve. More difficult to achieve is substantive convergence. In general, the findings suggest that the domestic institutional framework still matters, but what may matter more is that banks have the autonomy to integrate best-practices in a manner consistent with domestic conditions. [ABSTRACT FROM AUTHOR]

Resource-based theories of the firm argue that the success of one firm over another is largely due to its resource endowments. Large enterprises have long been recognised as leading sources of learning innovation and growth. This is not just restricted to large firms in developed economies, but also applies to firms in developing economies such as China, where large firms have long and complex histories in the state bureaucracy. Focusing on the case of China's petrochemical sector, this paper argues that even if a sector has a long history in central planning, the critical resources of a firm matter. It shows how existing organisational resources inherited from the pre-reform era, when provided with the correct incentive structures, can survive economic transition and be successfully applied under market conditions. In the petrochemical sector a key inducement was the commitment of the state to expose the sector to international developments where possible. The paper describes how this commitment has resulted in a mostly positive adjustment, but has also created ambiguities over how resources should be developed in future in a rapidly changing global industry. [ABSTRACT FROM AUTHOR]