Prospects and Pitfalls For Foreign Players In Chinas Financial Market - Dissertation Example

The resilience and flexibility demonstrated by the Chinese economy during the Asian financial crisis served as added come-ons to foreign investment, such that by 2005 the foreign funds flowing into China reached $72.4 billion (Kurtenbach, E., 2006). Another built-in attraction is China’s 1.3 billion people, the world’s largest population group in one place, that make for a consumer market unmatched anywhere in size and importance. Since the flags on all economic indicators in China are up, such as on investment, foreign exchange reserves, GNP and GDP, exports, employment and per capita income, these all come down to a strong purchasing power.

This rises to dizzying heights as the central bank buys off dollars generated from trade surpluses and from the inflows of foreign direct investment and speculative capital. The country’s export trade continues to grow by 20 percent yearly, while GDP, which currently averages $1 trillion, is programmed to reach $4 trillion in 2020. All these set the stage for the “big Chinese growth party” (Schlotthauer, N., 1999) that had actually been jumping early on, involving foreign companies in retail, manufacturing, pharmaceuticals, computers, electronics, office equipment.

World players in the financial sector took longer at the gates because of the more delicate nature of the business. Now, as China turns its juggernaut of reform to the development of its financial market, many foreign financial institutions of consequence are casting an interested eye on China.