Integration of Industry and Finance in China Examined by China's Economy & Policy-Gateway International Group

16 Feb 2012 • by Natalie Aster

At the meeting of heads of the central government-led enterprises on December 23, 2010, the State-owned Assets Supervision and Administration Commission (SASAC) clearly stated for the first time that the integration of industry and finance for central government-led enterprises should be carried out under the premise of risk control. It also suggested that to foster large enterprise groups that would have international competitiveness, the importance and necessity of integration of industry and finance must be fully understood. In this regard, it is important to study the current developments and problems in this area.

According to the report “Integration of Industry and Finance in China-Current Developments and Problems” by China's Economy & Policy-Gateway International Group, the integration of industry and finance mainly refers to the integration between productive enterprises and financial enterprises of equity, capital, talent, and business, so as to achieve common growth. Under the new situation, industrial and financial structures have become increasingly complicated, so the integration of industry and finance can be gradually conducted on a broader level. In theory, industrial and financial integration should include three features.

Report Details:

Integration of Industry and Finance in China-Current Developments and Problems
Published: January, 2012
Pages: 9
Price: US$ 200,00

First, financial capital takes the initiative to integrate with industry and businesses. For example, banks, trust companies and other financial institutions, as the core of the shareholding system, directly invest capital into those industries of strategic importance. Also included are a variety of financial supports provided by financial institutions for the development of industry and enterprises in the form of debt financing, consulting and other business methods. Due to the institutional and policy constraints, this type of integration is still in the early stages of development in China. Second, industrial capital flows into the financial industry. Integration dominated by industrial capital was the primary integration model throughout the histories of most countries, especially those with poorly developed financial industries. The industrial capital actively enters the financial industry to make itself more accessible to a variety of financial resources, and to expand the business chain so as to get access to diversified sources of earnings. Third, financial resources are integrated within enterprises.

More information can be found in the report “Integration of Industry and Finance in China-Current Developments and Problems” by China's Economy & Policy-Gateway International Group.

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