Where’s the inter-province financial connectivity?

NOTE: This was the unedited version of the article submitted to the Shenzhen Daily, and posted on October 16, 2017.

I got a phone call from one of my three banks last week, trying to convince me to get a loan that I don’t need.

Now, that’s not the purpose of this piece, because telemarketing is now part and parcel of living in China. I regularly get text messages and phone calls from various institutions trying to get me to agree to something or other.

The issue I have today is the fact that after starting my fifth year in China, I have had to open bank accounts with three different banks, just to suit my employer at the time. While this was the case in Australia in the 20^th century, electronic transfers have made this almost cost-free and instant, so wage earners do not suffer from banking with a different bank from their employer.

When I talked to one of my colleagues about this issue, they complained about the fact that they had problems with different branches of the SAME bank – when the branches were in different provinces. They talked about trying to organize some foreign exchange out of their account, but because their account was in Beijing, not Shenzhen, the Shenzhen branch could not do anything about it.

It boggles my mind that such a situation still exists in a modern economy in 2017. I’ve even had problems trying to top up the credit on my cell phone while outside of Guangdong – it can only be done online because stores will not permit you to do it.

I am aware that India has done a similar thing in the past with its banks and financial system, but I do not know if this is still the case. From what I recall, it was a profit-making system, as there would be transaction costs and this would raise additional funds for the companies involved. However, with people moving around more and more, I am not convinced that this is the best approach to take and perhaps it is time for India to change if it has not already.

I am sympathetic to the idea of the Chinese Central Government maintaining some control over finances, but surely this does not work at the provincial level. Given how much people have moved around, as well as the inherent flow of capital around the country, perhaps it is now time for the Ministry of Finance, in conjunction with the People’s Bank of China, to reconsider how these inter-province borders impact on finances. With the Big 3 of the telecommunications industry dropping cross-border charges in the last few months, this could be a good opportunity for the banking industry to consider similar reforms.