China Forex Country Report

Key Facts: Population: 1,350,000,000 Currency: Renminbi (RMB) Regulator: China Banking Regulatory Commission (CBRC)
Economic Overview: China is unusual as a destination to conduct business, as it does not have a free market economy. As a result of this, political structure plays a major part in the economic growth. China is ruled by a communist government which in some respects suppresses development, but in other respects sponsors the growth of Chinese industry and its expansion overseas. It also protects domestic industries which gives it an edge as a nation over the others in the BRIC category. However, the government does not go any way toward furthering individual prosperity or freedom of enterprise, indeed mostly hampering such movement. The caveats and main factors relating to entering China are detailed in the full report. China and India boast enormous populations which combined go to make up almost that of half of the world. However, the economically active proportion of these countries is only around 20% of their physical population. This demonstrates that there is still a very long way to go before either country will be considered developed.

This indicates China as being a potential worldwide economic powerhouse with its relatively high literacy rate, immense labor force and high life expectancy compared with other developing regions. In addition, there are more internet users in China than in any other country. By the end of 2011, the number of internet users was an astonishing 457 million. The potential is certainly extremely high considering this level of accessibility along with China's national interest in education and financial astuteness.

Forex Landscape
A persistent difficulty for forex brokerages is that China is more or less impermeable to western companies as the entire business methodology in China shows little resemblance to other global models. However, as China is at the beginning of its foray into the world of international forex trading, there is enormous potential. A further hindrance is that the government strictly controls every aspect of Chinese business, and imposes strict restrictions on nondomestic companies operating in China, even to the point of seizing the financial assets of companies participating in joint ventures with Chinese organizations, and blocking bank accounts of foreign companies operating in the territory.

Worldwide Total Volume Figures for FXCM 2009 and 2010 (Yards) Demonstrates China as Being a Significant Market.
A very common method of gaining a toehold in China without getting into a lot of legal trouble is to work with local representatives based in China. These representatives often have significant careers as introducing brokers, and built up a network of clients who trust them and will work with them on an ongoing basis. In China, it is very much common practice for investors to work with networks of trusted representatives, rather than to approach a company directly. Working with representatives is considered an independent operation, and does not constitute a joint venture or a partnership, both of which are illegal in China. A major concern for all large companies wishing to enter into partnerships with overseas companies or wishing to establish an actual office in China, is that the government could seize all of the assets and imprison the owners, often resulting in the entire client fund account being withdrawn by the government, as free trade with overseas companies of any kind is forbidden. The Chinese government and regulators view forex as a highly leveraged product which carries too much exposure. Specifically in China when we quantify the large population, huge lossess in savings can end up in crisis which would shake social stability. Chinese people have a gambling nature in their blood and also they have a lot of savings due to lack of social welfare and inequality on social wealth distribution. The government however also considers forex as a more fair game to play. With the huge market, clients can become better off without market manipulators, but opening up OTC is a big step for them, not only in forex but also futures. Expanded Report is available in Forex Magnates websites Research section