Earlier this year, Jamie Dimon, JPMorgan Chase chief executive, warned that breaking up the bank would leave room for a Chinese institution to replace it. On measures other than size (ICBC already has a market capitalisation on a par with Wells Fargo, the largest US bank) this might seem far-fetched: how could a state-owned entity hope to replace the profit-driven bastions of free market enterprise?
Chinese policy should provide support. China is targeting overseas expansion. The “Going Out” policy, which since 1999 has encouraged companies to make foreign investments, has recently been joined by the New Silk Road initiative. Designed to stimulate trade and investment with Asian neighbours, this should lead to large regional infrastructure projects backed by China’s state-controlled banks.
The government is pushing its currency overseas, too. Last year, all four of the big Chinese banks (ICBC, Bank of China, Agricultural Bank and China Construction Bank) increased the volume of cross-border renminbi transactions. Bank of China, China’s most global bank, grew its cross-border RMB settlements by a third to $850bn (this compares with the bank’s total international settlements of $3.9tn).