Bank of China given its own identity abroad
Peking — The clerks at the Bank of China do not use quill pens. But there is distinctly 19th-century flavor about the bank's somber business hall under a domed clock tower, not far from the Great Hall of the Peopel on tian An Men Square.
Tellers in blue or gray buttoned-up tunics fan out crisp new 10-yuan notes, counting them in fives. A customer's check is tossed expertly from desk to desk , each desk completing a piece of paper into cash. At a desk in the corner, a bespectacled clerk tells an anxious European in faultless French that no, unfortunately, his remittance has not yet arrived.
But this old-fashioned atmosphere is deceptive. In hectic Hong Kong, in the stately boardrooms of the City of London, even in upstart Luxembourg, the men of the Bank of China are diligently learning how to compete in the frantic yet clubby world of international finance.
Although the name Bank of China has been familiar to those trading with China for many years, the bank became independent only in March 1979.
"Until then we were, in effect, a department of the People's Bank of China," said Cui Yanxu, vice-president of the bank, in a recent interview. (Mr. Cui's surname is pronounced tsway, as in "its way").
"Since March last year," Mr. Cui continued, "we have had the status of a ministry under the State Council [cabinet], just like the People's Bank of China [an enormous bank, which combines normal banking with the functions of a central bank]."
The Bank of China is China's only foreign exchange bank and all foreign exchange dealings go through it. It has 53 branches within China (the Tibet branch is under construction now), covering all the principal coastal and river ports doing business with foreign countries.Its branches abroad total four so far -- Hong Kong, Singapore, London, Luxembourg. A Tokyo branch office will open in May, and one in New York is expected to open by the end of the year, according to Mr. Cui.
Mr. Cui said the bank's American business is expanding rapidly. The bank has correspondent relations with 46 American banks. Eighteen American banks have accounts with the Bank of China. The bank's American business totaled $2.4 billion in 1979 -- $1.8 billion to finance imports, $600 million to finance exports. Its total business that year came to $30 billion, 20 percent more than in 1978.
Mr. Cui did not have the profit figure for 1979, but said it would be substantially more than in 1978, when profits reached 1 billion yuan or $666 million. The bank handed over 20 percent of its profits to the state and was allowed to retain 80 percent for its own use, Mr. Cui said.
A year or so ago, China was busily lining up foreign credits for what promised to be a huge program of machinery, plant, and technology imports under ambitious industrialization programs. Since then, however, China has been undergoing a three-year program of "readjustment," and, according to Mr. Cui, has taken up only $200 million of the more than $20 billion made avilable to it. Readjustment means that priority is given to financing oil, coal, light industry including textiles, transporation, and the export-associated aspects of agriculture, Mr. Cui said.
In 1979 the bank made $1.4 billion available to Chinese enterprises to finance the foreign exchange costs of projects in these fields, Mr. Cui said. Local costs of such projects are financed by the People's Bank of China and by two special banks which have been recently revived -- the Construction Bank and the Agriculture Bank, Mr. Cui said.
With regard to one specific issue that has delayed the implementation of full reciprocal relations with most American banks, Mr. Cui said a delegation from the Finance Ministry had been in the United States for a month seeking a settlement. This is the issue of China's frozen assets in the United States.
The United States has agreed to release $80 million in such assets, of which remaining sum, China is demanding that those American banks that held its assets pay interest for the nearly 30 years of free use they enjoyed.
Some banks have complied, but most have not, citing a federal law that prevents interest payments on current accounts. A compromise in the form of a "goodwill" payment by the banks concerned seems likely, Mr. Cui indicated.