Author: Thomas Clouse


Henry Paulson with
China’s president
Hu Jintao

China’s Communist Party is shaking up its leadership in the country’s financial hub. Shanghai party chief Chen Liangyu was removed from office in September and may face criminal charges as part of an investigation into illegal investments made by the city’s social security fund managers. Shanghai’s Baoshan district governor and the head of the city’s social security fund also have been dismissed.

The leadership changes publicly reaffirm Beijing’s commitment to stamping out government corruption and will allow current president Hu Jintao to choose a replacement for Chen, who was appointed by Hu’s predecessor, Jiang Zemin. The new appointment will firmly establish Hu’s political power ahead of China’s 17th Party Congress next year.

Japanese prime minister Shinzo Abe visited China in early October only weeks after taking office. Diplomatic relations between the two countries have been tenuous in recent years largely due to Japan’s past wartime aggressions and differences in how the two countries interpret those actions. Economic relations have in the same period deepened significantly, with China replacing the US last year as Japan’s largest trading partner. During his visit, Abe acknowledged damage Japan had inflicted upon its neighbors and emphasized the importance of good relations between the two countries.
Newly appointed US secretary of the treasury Henry Paulson also met China’s political leaders in Beijing in September. While the visit yielded no direct commitments from China, the yuan subsequently rose to its highest level against the US dollar since the dollar peg was removed last year. Legislation in the US Senate that would have imposed significant tariffs on all Chinese goods was also dropped.

The Industrial and Commercial Bank of China (ICBC) kicked off its road show on October 9 for what will likely be the world’s largest initial public offering (IPO) to date. ICBC is China’s largest bank by deposits and operates almost 19,000 branches around China. If an over-allotment option is exercised, as many expect, the total amount raised could reach $21.9 billion, easily ranking the IPO as the world’s largest. Stocks will be offered on both the Hong Kong and Shanghai stock markets.

Thomas Clouse