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WorldSeptember 1 2014

China's prime time for trade finance

With heavy state involvement and the occasional scandal, China’s trade finance sector may not be perfect. But significant change is under way as government policies facilitate growth and diversification in the country’s industry and financial sector. 
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China's prime time for trade finance

Trade finance in China targeting domestic firms is poised for a new wave of expansion as government policies aim to develop and diversify Chinese industry. The country's business landscape is changing. Colossal state-owned enterprises (SOEs) no longer dominate Chinese commerce; privately owned enterprises and small and medium-sized enterprises (SMEs) have become just as influential. New sectors are emerging and manufacturing, construction and real estate no longer monopolise the pulse of trade. Technology and consumer-durable firms targeting domestic buyers are expanding quickly, in turn becoming key clients for trade finance service providers in China.

Although trade finance across the Asia-Pacific can still be challenging, a softening of Western markets since the 2008 global financial crisis and recent growth in emerging economies have unveiled trade opportunities in the region. “Trade finance in Asia was not always this popular. Financial institutions are realising now, also out of necessity after the crisis, that there is potential to support trade finance in these emerging markets,” says Steven Beck, head of trade finance at the Asian Development Bank (ADB).

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