China greenlights Mastercard JV for bank card clearing operations amid further opening-up

Move sends positive signal on deepening China-US economic, financial cooperation

US payment company Mastercard’s Chinese joint venture (JV) told the Global Times on Monday that it will offer yuan bank cards under the Mastercard brand as soon as possible, and support card holders to make payments involving more than 100 million vendors in China and abroad, after China’s financial regulator greenlighted the JV for bank card clearing operations last week.

The approval makes Mastercard the second overseas bank card clearing institution to enter the Chinese market after American Express in 2020, which observers said underscored the huge draw of China’s financial market amid its stepped-up opening-up moves.

The fresh effort by the leading US company counters the rhetoric of US financial companies fleeing China, hyped by some Western media outlets, which analysts said are exaggerating individual cases to smear the Chinese economy.

It also sends a positive signal on deepening economic and financial cooperation between China and the US, on the heels of the meeting between the leaders of the world’s two largest economies in San Francisco last week, which injected stability into bilateral relations, analysts said.

China’s central bank on Sunday announced that it and the National Financial Regulatory Administration had approved an application by Mastercard NUCC Information Technology (Beijing) Co, a JV of Mastercard and NetsUnion Clearing Corp set up in 2019, to conduct bank card clearing operations in the country.

According to a statement the JV sent to the Global Times on Monday, the firm will expand the number of member institutions in China to authorize the issuance and acceptance of Mastercard-branded cards, within six months of gaining certification.

“China is one of the most important markets of Mastercard… Mastercard will be more deeply engaged in the Chinese market, to help the high-quality development of China, further promote the benefits of an inclusive digital economy for everyone and unlock more priceless opportunities,” Mastercard CEO Michael Miebach was quoted in the statement sent to the Global Times.

Experts noted that Mastercard, as the  second-largest US bank card clearing agency, being granted permission to enter the Chinese market is a practical step in implementing the country’s policy of high-quality opening-up.

The move demonstrates China’s unwavering determination to further open up, which is being conducted in an orderly manner, Gao Lingyun, an expert at the Chinese Academy of Social Sciences, told the Global Times on Monday.

Observers added that it would mean more convenience for foreigners and foreign enterprises that are doing business in China, as Mastercard has an advantage in cross-border payments.

“The ongoing opening-up of the bank card clearing market would also promote the internationalization of the domestic market, improve service levels and elevate risk-prevention ability, which is conducive to China’s financial supply-side reform. This will make the financial sector better serve the real economy,” Wang Peng, an associate researcher at the Beijing Academy of Social Sciences, told the Global Time on Monday.

Mastercard’s high expectations for expanding its footprint in the Chinese market also debunked Western flare-ups on foreign capital leaving China, analysts said. It showcass the magnet of China as one of the world’s largest consumer markets and a fast-developing financial market.

In 2022, a total of 7.45 trillion bank card transactions were processed in China, amounting to 1,011.9 trillion yuan ($141.1 trillion), data released by the country’s central bank showed.

Bloomberg recently reported that US fund giant Vanguard Group is taking steps to exit China and shut down its office in the 29 trillion yuan mutual fund market. The Financial Times reported that US consulting group Gallup “is pulling out of China,” moves that were cited as evidence on multinationals’ withdrawals from the Chinese market.

“Their exits from Chinese market reflect multiple considerations and should not be over-interpreted. It is important to note that they’re individual cases and their moves were hyped for a malicious attack on the Chinese economy,” Wang noted.

Last week, Chinese and US leaders concluded a significant China-US summit, setting the direction for the healthy, stable and sustainable development of bilateral relations. Analysts believe that the entry of a new US company into the Chinese bank card market is adding positivity to the improving climate.

“It shows the intricate and complementary ties between the Chinese and US economies, which would make the decoupling push by certain US politicians very hard to achieve. We could see from the perspective of companies that strengthening cooperation is the best way to handle bilateral relations, as it would lead to win-win results,” Wang noted

(Global Times)

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