Citi, other global financial firms step up expansion in Chinese market in 'vote of confidence'

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US-based Citigroup Inc plans to launch a wholly owned investment banking unit in China by the end of 2024, according to Reuters, adding to an increasing number of global financial institutions that are actively expanding their presence in the Chinese market.

While some foreign media outlets and institutions continue to paint a grim picture of the Chinese market's outlook, global investors' concrete business plans in China are a "vote of confidence" in its economic prospects, Chinese analysts said on Friday, noting that continuous financial opening-up and an improving business environment offer greater opportunities for global businesses.

Citing an unnamed source, Reuters reported on Thursday that Citigroup aims to launch a wholly owned China investment unit by the end of 2024 and hire about 30 employees. The unit, which will focus on the Chinese capital market, could hire nearly 100 people in the coming years, including local hires and transfers from Hong Kong and other markets, according to Reuters.

Reached by the Global Times on Friday about the report, Citi China referred to a New Year's message from Christine Lam, CEO of Citi China, in which she talked about Citi's long history and extensive presence in the Chinese market.

"The Chinese market is extremely important in Citigroup's global strategy," Lam said in the message posted on the company's WeChat account, pointing to two trips made by Jane Fraser, CEO of Citigroup, to China in 2023.

"In this market full of opportunities, Citi will remain committed to providing excellent cross-border services to corporate and institutional clients," Lam said. "At the same time, we will continue to help foreign-funded institutions participate in China's ever-opening market and share the new opportunities brought by China's opening-up and development."

Reports of Citi's plans for the Chinese market came just two days after Chinese regulators approved US-based AllianceBernstein Holding LP's application for a license to run its wholly owned mutual fund business in China.

Following the approval, "AllianceBernstein will provide Chinese investors with domestic investment products and solutions, and help tap investment opportunities in China's local market," the company said in a statement sent to the Global Times on Tuesday.

The plans by Citi and AllianceBernstein are latest examples of the growing number of foreign financial institutions that are expanding in the Chinese market, which shows their confidence in the Chinese economy amid continuous opening-up and an improving business environment, analysts said.

"It is mostly foreign media outlets and so-called analysts who are smearing the Chinese economy because of bias and political and other motives, but for businesses that are seeking opportunities and profits, they are obviously optimistic about China's economic prospects," Li Yong, a senior research fellow at the China Association of International Trade, told the Global Times.

Li said that China's continued financial opening-up measures and efforts to improve the business environment, including through institutional opening-up, have made "tangible progress," which explains the growing expansion by foreign businesses in the Chinese market.

"Also, importantly, Chinese officials of all levels pay great attention to foreign businesses and they often hold talks with foreign executives to not just hear about the problems they face but actually solve them," Li said.

During her visit to China in June, Fraser met with several Chinese regulators and clients. During a meeting with Li Yunze, head of the National Financial Regulatory Administration (NFRA), Fraser expressed confidence in China's economic and financial development and Citi will continue to expand in the Chinese market, according to an NFRA statement.

In October, Citigroup was one of several global financial institutions that raised China's 2023 economic growth forecast. Citi expected China's GDP growth to reach 5.3 percent in 2023 up from its earlier forecast of 5 percent.

Chinese regulators have also stepped up efforts to expand market access for overseas financial institutions. In December 2023, the China Securities Regulatory Commission approved six overseas institutional investors' qualifications to conduct businesses in the Chinese market, bringing the total to 81 in 2023.

China's Central Financial Work Conference in October, a crucial meeting that sets financial work priorities for the coming years, called for efforts to promote high-level financial opening-up. Specifically, the meeting called for the steady expansion of institutional opening-up in the financial sector, improved cross-border investment and financing facilitation, and more foreign financial institutions and long-term capital to expand and conduct businesses in China.

"There is a growing number of reasons that more foreign capital will flow into China's capital market in 2024," Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management Co, told the Global Times on Friday, noting that China's economic recovery is expected to speed up, while the US is entering a cycle of rate cuts which will pressure financial markets.