Treasury Today Country Profiles in association with Citi
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March 2011


Issue One 2011

The gradual return to global economic growth provides a theme in this issue, the first of 2011. China did not come close to entering the recession experienced by many western countries, and although growth fell from its previous highs, the economy continues to boom. This growth poses certain challenges for expanding corporates in China. For treasurers of corporations which are increasing their exports and overseas operations, this includes the changing demands of bank relationship management.

Addressing this in our Treasury Practice article – ‘Bank relationships in China: keeping the right balance’ – we look at topics such as choosing a bank and maintaining strong relationships, as well as the importance of working successfully with regulatory authorities. We talk to treasurers and bankers about the challenges which they face in China, and consider the needs of global companies moving into the market, as well as those of domestic corporates looking to expand overseas.

Currency disputes provide another backdrop to this edition. The US stands accused of using quantitative easing to aid depreciation of the dollar, whilst China is blamed for maintaining an artificially weak renminbi. This issue’s Question Answered sees an expert in the field address the impact that renminbi exchange rate reform will have on corporate treasurers.

International regulations continue to develop, and the effects of these changes on China will be closely watched. Basel III might have the greatest significance for western banks with low capital holdings, but their Chinese corporate clients will also feel an impact. Chinese banks might also have to make adjustments for the new rules – although their average core tier 1 capital ratio of 11.1% far exceeds that required by the Basel III rules, supervisory changes are anticipated. Find out more in this issue’s Finance A-Z.

Treasury Today’s Hui Chuan Awards 2010 featured in the previous edition of Treasury Today in China, and this issue includes an interview with the China Treasury Team of the Year award winner. Pui Yee Lee, Director of International Treasury at Honeywell China, explains in depth how her treasury has evolved in accordance with the company’s rapid growth in China.

Honeywell’s treasury won the Hui Chuan Award in part for its ‘strategic road map’ – a plan to build a stable and effective treasury, responsive to regulatory changes and with an efficient banking structure. Pui Yee outlines the objectives of the road map and the challenges faced in implementing them. She also gives examples of the challenges the team faces over the coming year – such as the fragmented nature of China’s domestic banking system and the huge number of legal entities under Honeywell’s control in the country – along with advice for treasurers operating in China.

Finally, in this issue’s China Focus article we continue our series on money market funds in China with a look at the factors which treasurers should take into account when choosing a fund.

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