A comparison banking industry between USA and China

【Abstract】In this article specially concern about the Banking Industry in China and USA with continuing comparison about china and USA banking industry as well as with the Economical situations. And these banking industry comparison and the reasons for successfulness or unsuccessful situations in each country will be helped to guest the idea about USA and China economical situations in the future. A country financial sector is more important for their Economy and financial sector in a particular country is not has meaning without Banking sector therefore study about Banking sector will also help to get broad knowledge about particular country’s economical and financial situations. Many of writers nowadays give attention to china and USA financial sector. ，specially in the area of Banking industry and stock market therefore information in this article helps to future investors to decide their path of investment portfolio in a certain extent.

【Key words】Ｂanking industry；USA；China；Ｃomparison

1.Will China overtake the USA as an economical wise?

Nowadays banking in industry in china is become more important in the world banking industry except USA banking industry.As a fast rowing country，Chinese financial institutions play a crucial role in the world financial market as well.There are some novelties behind why USA and many of developed countries look towards the world largest population. Many of people concern that USA is the world leading country in political and financial aspect for the 3rd Generation but there is no possibility to USA and Europe stay in financial strength everyday，with the time financial and political strength passing concatenation to concatenation.Therefore there is a hidden but knowable questions still remain to answer，and also the symbols of ancient China are still remained to show the world that how they spend their life styles as prosperous nation before.

With the highest growth rate of economical and technological advancement，China again gives competitive aspect to other wealthiest nations.The development of china is not only important factor to Chinese nation，many other developing countries are being benefited to get a highest GDP growth rates because Mass capital projects are invested in those countries by China. Nowadays China and USA have become the main active members of the banking industry in the world as well as in the future.“China could overtake the US in terms of the size of their domestic banking sectors by around 2023”(PricewaterhouseCoopers (PwC) Banking in 2050:published may 2011)

2.Behavior of the World largest banks

Above PricewaterhouseCoopers(PwC)’s report is becoming furthermore implicit report while comparing with the world largest banks according to market capital. Therefore every country’s financial sectors are playing the crucial role to decide the affluence in a development theater and financial sector doesn’t have a meaning without banking Industry for a particular country.Therefore study and research about banking industry， will give a sense about the investment trends of the financial sector.

12 World’s largest banks from the market capitalization are including 4 Chinese banks and 4 USA banks;Industrial Commercial Bank of China (ICBC) is the largest bank in the world by market capitalization value(240.95 billion US dollars) on the date of 20/1/2012. 2nd largest bank in the world is the China construction Bank(with the market capital value 195.85 billion)，is attesting the importance of both countries to banking industry in the world and the People’s Republic now has 4 of the top 7 banks，including the top 2.USA banking Industry had downward growth rate in last decades with facing an aggravating financial crisis， Even though USA largest 4 banks could still rank as 3rd， 6th，9th and 12th from the market capitalization in the world.

Due to world financial crisis in 2009，WFC and JPM have shown an obvious decrease to downward (graph 2)，specially in 2009 USA economy degradation directly had effect on their banking industry and even USA government planed to sell out their $1.7 trillion bonds，in February 2009. During this period Japan exports were down 50% even though China’s exports were down only 25%，thus with China’s economical situations ICBC’s downward shift is not a considerable extent with comparative to WFC and JPM.In the middle of 2010 Agriculture Bank of China had the world's biggest initial public offering，after 2010 until 2012 April ABC still remains good market position and this situation can realize the supremacy of banking industry in China.The reason behind strong banking system in China no more secret to the world， mainly two reasons can be suggested first is China has a strong economy due economical reforms and second is massive government intervention in banking sector. But in the recent past in China’s government intervention not much than before， we can say that China’s banking industry is searching for new dimensions in the market economy.In this situation even if China allowed establish the private banks， private banks can’t be success in a short period of time.Main reason behind that， people in china still trust the government bank system more than private financial institution for their financial dealings but many of Chinese SMEs need more financial support to develop their business.In this scenario if in the future private banks could be able to finance smoothly for SMEs situation of the big 2 banks in the world probably can be changed but the success depend on the competitive strategies in USA and China.In this decade China is become more popular in USA and other European countries even with the ordinary people and USA’s many economical and financial experts try to find the solution to get upgrade their financial sector more than before therefore USA’s financial strategies also can’t be underappreciated in the future.

WFC:Wells Fargo Company

JPM:JPMorgan Chase Co.

ICBC:Industrial and Commercial Bank of China

ABC:Agricultural Bank of China Ltd

SME:small and medium sized enterprises

【References】

［１］PricewaterhouseCoopers (PwC) Banking in 2050: published may 2011.

［２］www.retuers.com.

［３］www.nyse.com.

［４］www.sse.com.cn.

［５］www.relbanks.com.