Summary
China Minsheng Banking Corp become the first bank invest in US bank before Industrial and Commercial Bank of China and China Merchant Bank get the banking licences.
Analysis
US with liquidity problem in the banking system is open up to China Minsheng Banking Corp to invest in UCBH Holdings which to be first bank to do that despite Industrial and Commercial Bank of China and China Merchant Bank still waiting the banking licences from US authorities.
US very cautious to open the market to China investors especially the sensitive industries, Minsheng can make the deal success because the their background which not a state owned and their relationship with Board of UCBH Holdings which mostly Chinese and the bank is serving the Chinese-American community in California area.
Chinese will make all mean to invest in US as the profit margin in the mainland getting less and more competitive, with the bank open the door in US other industries will try to invest in the very near future to avoid over developed in China as the government now more concern of their political stability as more and more farmer unrest happened in China now the ten years ago.
Corruption and misuse of power by government officials also make banks doing business in China become more riskier as money lend out will not secure being fully collectable as government official involvement and the mobilization of people become greater make lender difficult to locate borrower.
China is placing stringent rules to curb the labor incentive industries and high pollution industries, as Chinese made great wealth by investing in those industries, it is now the time they have to move to more technology and branded industries which will make some investors move out of China and go to other third countries like Vietnam and Cambodia.
