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China to Get Its First American Credit Card

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LARGE CHARGE
DailyFeed

You know how it is when a communist country gets its first American credit card. It starts out being responsible, making only essential purchases and paying off its balance every month. But then it looks at the spending habits of its friends and neighbors and starts to feel enviable about all their shiny, fancy new wars. And just as its going back to read the fine print, its low promotional interest rate period has ended and its racked up insurmountable debt -- say a trillion bucks.

Looks like the laundry slipper is about to be on the other bound foot, China!

Granted, this scenario is completely far-fetched, but isn’t it fun to think about?

While the plastic it’s made of will no doubt be manufactured in its own country, an American credit card will finally have the opportunity to be slipped into the wallets of the Chinese populace. Following a long-standing reticence to allow foreign banks to issue cards without a co-branding agreement with Chinese operators -- let alone permit American bank card transactions -- Citigroup (C) announced on Monday that its subsidiary Citibank will become the first non-Asian financial institution to offer credit cards in China.

“This approval represents a significant milestone in the continued expansion of Citi's business in China, a priority market for Citi,” said Stephen Bird, CEO of Citi's Asia Pacific unit.

It took the threat of legal action by the World Trade Organization, but the Chinese government is beginning to loosen its non-compete banking policy by allowing Western access to its consumer base of over one billion people. Until now, Citibank could only offer credit and debit card services in China through a partnership with the Shanghai Pudong Development Bank (SPDB). The support was restricted to technical and personnel capacities and its customers belonged exclusively to SPDB.

Chinese regulators certainly aren’t opening the floodgates but, according to Fredrik Erixon, director of the Brussels-based European Centre for International Political Economy, US and foreign banks are starting to see a “cautiously gradual opening” into the Chinese market.
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