Netelis Newsletter
 
  Remittances
and Banking in China
  The vast majority of the local remittance in China is carried out today by the China Post Office, started by the British in the Qing Dynasty. Internal remittances are of enormous importance in China where a large percentage of an earning persons wages will be sent to family in other provinces on a regular basis. CashToChinas close relationship to the China Post Office and its traditional role as the largest remitter in China makes for an outstanding partnership enabling Chinese to transfer money from anywhere in the world using the same trusted institution to receive money that has been used for over a hundred and twenty years.
China Post Office 中国邮政
 
piaohao (票号) and qianzhuang (钱庄)
   
  China domestic remittance industry goes back much further than the Qing; Chinese financial institutions were conducting all major banking functions, including the acceptance of deposits, the making of loans, issuing notes, money exchange, and long-distance remittance of money by the Song Dynasty (960-1279). In 1024, the first paper currency was issued by the state in Sichuan. The institutions of piaohao (票号) and qianzhuang (钱庄) more often cooperated than competed in China's financial market. Piaohao were also known as “Shanxi Banks” as Shanxi province was the center for financial activities and largely controlled by the families in this province and by the end of the nineteenth century there were more than 425 of them throughout all of China.

Qianzhuang were small independant, local banks to service secure keeping of money. They maintained close relationships with Chinese merchants, and grew with the expansion of China's foreign trade. When Western banks first entered China, they issued "chop loans" (caipiao) to the qianzhuang, who would then lend this money to Chinese merchants who used it to purchase goods from foreign firms. It is estimated that there were around 10,000qianzhuang in China in the early 1890s.

 
 
British and other European banks entered China around the middle of the nineteenth century to service the growing number of Western trade firms. The Chinese coined the term yinhang (银行), meaning "silver institution", for the English word "bank". The first foreign bank in China was the Bombay-based British Oriental Bank (东藩汇理银行), which opened branches in Hong Kong, Guangzhou and Shanghai in the 1840s. Other British banks followed suit and set up their branches in China one after another. The British enjoyed a virtual monopoly on modern banking for forty years. The Hong Kong and Shanghai Banking Corporation (香港上海汇丰银行) established in 1865 in Hong Kong, later became the largest foreign bank in China.

In the early 1890s, Germany's Deutsch-Asiatische Bank (德华银行), Japan's Yokohama Specie Bank (横滨正金银行), France's Banque de l'Indo-Chine (东方汇理银行), opened branches in China and challenged British ascendancy in China's financial market. By the end of the nineteenth century there were nine foreign banks with forty-five branches in China's treaty ports.

Foreign banks enjoyed extraterritorial rights. They also enjoyed complete control over China's international remittance and foreign trade financing. Being unregulated by the Chinese government, they were free to issue banknotes for circulation, accept deposits from Chinese citizens, and make loans to the qianzhuang.

Remittances of domestic migrants from the countryside in China often form a major part of the income received in rural areas ($40 billion in 2007) and transfer money from city workers to the countryside. CashToChina’s service allows the large Chinese overseas population the ability to send money home to families to more places than any other business; We hope that you will join us in accessing the largest and fastest growing marketplace in the world.

 
 
  Best Regards,  
 


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