CHINA’S NATIONAL PAYMENTS CLEARING SYSTEM WILL FUEL INTRA-REGIONAL TRADE BY DOMESTIC AND FOREIGN COMPANIES

NEEDHAM, MA - 30 August 2007

TowerGroup Research Explores Evolution of China’s Payment Systems and Their Impact on the Global Economy

While The People’s Republic of China is the second largest economy in the world, it has long suffered from a lack of efficient payment and settlement systems. New research from TowerGroup finds that following a recent series of modernizations in its national payments infrastructure – including the completion of modern clearing and settlement systems in 2007 – China now finally possesses national payment capabilities worthy of an economic powerhouse.

In just 10 years, through the Chinese National Advanced Payment System (CNAPS) initiative, China’s central bank has developed and implemented three new payment systems using state-of-the-art technology. These systems provide a national network for high-value payments, bulk low-value payments, and most recently, national check-image exchange. TowerGroup finds that access to national clearing, along with enhanced funds transfer capabilities with Hong Kong, will better facilitate intra-regional trade for domestic Chinese and foreign companies alike.

“The fragmented banking system and lack of a national payments infrastructure has constrained intra-regional trade among China’s provinces,” said Colin Kerr, a senior analyst in the Global Payments practice at TowerGroup. “In order to take full advantage of the tremendous economic opportunities now flowing to China, the country must continue to embrace more efficient and effective national payment and settlement systems.”

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