View of the Bank of China building in Hong Kong. PHOTO BY TOM CHRISTENSEN.
The Bank of China, one of the pillars of China’s financial infrastructure, holds a unique place as the most recognizable and international institution in the national banking system. The bank has survived numerous political transitions and economic systems and is poised to become a powerful player in the global financial scene.
Over the past century, the Bank of China (BOC) has had a hand in virtually all of China’s major financial efforts. The Bank of China had roots in a bank established by the Qing government in 1905 to serve as a central authority for the Imperial Board of Revenue. It issued notes in 1908 but did not have a powerful national presence until it was formally founded, with Sun Yat-sen’s approval, as part of the establishment of the Republic of China in 1912. The BOC served as China’s primary fiscal and financial authority until 1949 and the founding of the People’s Republic of China. During the volatile period from 1912 to 1949, the bank served as one of the few stable sectors in the country. Through prudent expansion into increasingly stable areas and with prompt response to political changes, it managed to maintain its position of power and influence throughout. In 1929 the bank opened its first international branch, in London.
After the revolution of 1949, BOC was relegated to a secondary role from the newly established People’s Bank of China (PBC). The PBC controlled domestic financial and fiscal policy and was tightly controlled by the central politburo. BOC, fully nationalized, was used primarily as an international exchange bank and served mostly in this role. This thirty-year period was typified by extreme economic isolation, with all foreign banks having been required to exit the country. Representatives of the Bank of China were frequently the representatives in international trade discussion.
During and after the formal opening of China in 1979 and 1980, BOC changed from being just the international financial face of China to being the largest commercial bank. The bank took several notable steps to provide a greater range of financial services, issuing international bonds in 1984 in Japan. Japan provided BOC with one of its most fruitful initial international presences, as it was able to participate in Japan’s economic boom during the late 1980s and early 1990s. In the 1990s the bank expanded its international role, using its position as the primary international bank of China to attract internationally experienced professionals to its management team. Focusing on modernizing its operations, it became the note-issuing bank of Hong Kong and Macao, and established several subsidiaries, including BOC Hong Kong, BOC International, BOC Insurance, and other lesser financial entities.
In 2003 the Bank of China became one of the pilot banks for a new project to engage in reforms to give banks more leverage to compete in international markets. On 26 August 2004, Bank of China, Ltd., was formally incorporated as a state-controlled commercial bank, a unique institution in the financial world. As a commercial bank, it accepts deposits and makes loans to individuals and businesses.
Bank of China has more than 10,000 branches in China and more than 600 branches in 27 countries, including Canada (Toronto and Vancouver) and the United States (New York and Los Angeles). Around the world, it employs more than 200,000 people. It has assets estimated at 3 trillion yuan (about $385 billion) and has been included in the Fortune Global 500 for 17 consecutive years.
Further Reading
Jaffe, D. A. (2008). Bank of China makes history with its core banking project. Framingham, MA: IDC.
Lou Jiwei & Wang Shuilin. (Eds.). (2008). Public finance in China: Reform and growth for a harmonious society. Washington, DC: World Bank.
Ren Min. (2006). Joint-stock reformation of state-owned commercial banks in China. Retrieved February 4, 2009 from http://www1.doshisha.ac.jp/~sshinoha/report/2006/2006_china/Papers%20of%20Renmin%20Unv/WangXi2005_Paper.pdf
Source: The Editors. (2009). Bank of China. In Linsun Cheng, et al. (Eds.), Berkshire Encyclopedia of China, pp. 141–142. Great Barrington, MA: Berkshire Publishing.
Bank of China (Zh?ngguó Yínháng ????)|Zh?ngguó Yínháng ???? (Bank of China)
