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Chapter 750: Chapter 651 Natural Enemy (Please Subscribe!)_1
November 7th.
Monday.
Beijing.
Lang Cai and his delegation arrived at Beijing airport at ten fifteen in the morning.
As it was not an official state visit, but merely a discussion about the RMB loan, it wasn’t made into a grand event. Instead, Lang Cai’s team was received in the visitor’s lounge, following the standard procedure for receiving foreign guests.
All collateral information and application materials had already been sent to Beijing the previous Friday, so there was no need for further discussions. Beijing had completed the preliminary work over the weekend.
The loan would be formally approved once Lang Cai agreed to some conditions. It was unnecessary for the senior leaders to participate in the specific loan meeting, as they had more pressing matters to attend to.
So, after a courteous photo-taking session, they left.
Only the staff from the business department, foreign affairs, the central bank, and the headquarters of the four major banks were left behind.
The meeting was chaired by Zhu Wei, the governor of the central bank.
The business department was in charge of the negotiations.
To be honest, normally, Zhu Wei shouldn’t have been in charge of this meeting. After all, the central bank only prints the RMB, and does not have the authority to provide loans. However, since the Huaxia Bank wanted to obtain a banking license in Myanmar, this inevitably involves the clearing system of the central banks of the two countries.
This naturally falls within the jurisdiction of the central bank, something the four major banks cannot decide on.
"President Lang Cai, we once again welcome your visit to Huaxia. In principle, we agree with your loan application for 1.6 trillion RMB. However, we have several demands regarding the terms of details."
"Please go ahead," said Lang Cai.
"In the purpose of the loan, you mentioned using the RMB loan to purchase our construction materials, machinery, equipment, services, etc., for which we thank you for your trust in Huaxia and the RMB. We are grateful for your support of our domestic enterprises. You suggested that 40% of the loan will explicitly use Huaxia’s service providers, but we hope to increase this to 70%. As you know, we have abundant experience in projects such as highways, bridges, railways, airports, docks, power stations, etc. We also have many low-cost products in automobile manufacturing, industrial equipment, heavy machinery, and metal smelting. There are also many possible collaborations in the technology sector. I don’t think 70% is a very high figure."
In the email sent earlier.
The railway, large-span bridge, airport, dock, hydropower station and other projects planned by Myanmar were clearly stated to be handed over to Huaxia companies with a total investment of nearly 700 billion RMB. However, many other projects did not have clear designated recipients.
That’s why it’s necessary to raise the proportion. 𝒏𝙤𝙫𝒑𝙪𝙗.𝙘𝒐𝙢
The money doesn’t mean that only goods within Huaxia can be purchased with RMB. For instance, in construction bidding, Huaxia companies could participate, but so could foreign companies or Myanmar companies.
If Huaxia companies win the bid, it’s all fine. The money earned is usually used for business operations.
But if a company from another country wins the bid and earns the money, it wouldn’t necessarily invest in domestic industries. For example, a Myanmar company, after earning RMB, would definitely exchange it for kyats. And where would the exchange take place? Of course, it would go to the Central Bank of Myanmar.
What would the Central Bank of Myanmar do?
Of course, they would give the company the kyats and take the earned RMB, then use it as Myanmar’s foreign exchange reserve, lying dormant until such time in the future when it can be used to repay the principal or interest to Huaxia’s bank.
In the short term.
It would not flow into the market at all.
Therefore, it’s necessary to raise this ratio. The main aim is to allow the RMB to enter the Huaxia market and stimulate economic growth, instead of letting it sit idle or be offset through bilateral trade.
Lang Cai tried to maintain a smile and said, "That ratio is a bit high, isn’t it? We need to consider our domestic employment problem. The 40% is the ratio we committed to before. Raising it to 45% sounds appropriate. At the most, we can raise the ratio for importing Huaxia’s industrial equipment on other goods... "
"President Lang Cai, I too understand the employment issue in Myanmar... "
Every single point here.
It represents not just a few hundred million, but billions of capital flow.
The more points can be gained, the more billions of investment can be created for the domestic market. Therefore, the efforts upon such contests were tireless. The number eventually settled at 59%.
It can be regarded as satisfactory to all.
Huaxia getting 59% of this money does not mean Myanmar would be at a loss. Those who facilitated this loan were not concerned. Many things, they indeed couldn’t manage and had to purchase from Huaxia.
Construction projects make up the majority of this plan, which is why they were eager to raise the limit. It’s because under the previous 800 billion scale, their projects, although lucrative, were not as large as now.
Secondly, we hope Myanmar will allow Huaxia to open banking access, permit Huaxia’s banks to conduct deposit, loan, currency exchange and credit services in Myanmar. I think this will have positive implications for our loan. We would like to apply for four banking licenses in Myanmar to promote the normal flow of funds between the two countries... "
"..."
"..."
Close to noon.
The negotiation was only a small part of it.
After lunch.
The negotiation continued.
As dusk fell, the terms of the entire loan were finally determined.
First, at least 59% of the entire loan was to be used for purchasing services and goods from Huaxia.
Secondly, Myanmar approved Huaxia Industrial and Commercial Bank and Huaxia Construction Bank to each acquire a banking license, allowing the two enterprises to enter the banking industry in Myanmar to conduct general banking operations such as deposits, loans, and exchanges.
Each bank can open no more than two branches in cities above Myanmar’s municipal level, and no more than five branches in the capital of Myanmar. They can’t settle or accept the dollar foreign exchange reserve with the Central Bank of Myanmar. Regarding the credit card business, they promised to open it three years later.
...
The rest of the several dozen issues mainly dealt with some project bidding and other detailed issues.
To put it simply,
Lang Cai had a throbbing headache throughout the morning. Luckily, he wasn’t the main negotiator, only needed to make decisions on some major interests.
The rest was left to Ling and the Huaxia business department for negotiation.
This time.
Ling’s negotiation ability gave Lang Cai immense cheer, as before they were always overwhelmed by Ling. But this time, Ling was helping him. Seeing the look of despair on the opposite side, Lang Cai felt wonderful.
And Ling’s negotiating ability made a profound impression on the Huaxia side too.
Generally speaking, everyone was merry.
...
At night.
Tang Qing finished reviewing the summary content of the entire conference.
The credit cards they mentioned intrigued him.
To stimulate the economy, overdraft consumption is inevitable. The stimulation of future local demand in Myanmar would largely be due to the expansion of the borrower demographic. However, Myanmar currently does not allow foreign banks to conduct credit card businesses.
But the Myanmar Banking Group could. Other places might not work, but at least in the Myanmar Economic Zone, they could take the lead. This could also serve as an experimental field to prepare for mass popularization in the future.
You see.
Credit cards are a considerable cash cow of banks.
In Western countries.
Credit cards are the real moneymakers. As for the money from ordinary loans, they are insignificant, especially for western banks that have long maintained low interest rates, with annual interests of three percent, two percent, or even zero percent. They can’t earn decent money then.
In New York, USA.
An annual interest of eighteen percent violates civil law.
An annual interest of twenty-five percent violates criminal law and could lead to arrests.
But the interest on credit cards can be as high as thirty to forty percent without any restrictions. In the United States or Western countries, credit cards are the only legal usury and the largest source of profit for bankers.
At this point.
Tang Qing finally had a clear understanding of how cruel and acute the interest conflict is among Alipay, WeChat, and foreign banks.
In his previous life.
When Alipay and WeChat Pay tried to gain recognition and expand into foreign markets, they were repeatedly obstructed and ultimately had no choice but to remain within China’s borders. Tang Qing had always found this strange.
But this moment.
From a banking perspective.
These two things really are like enemies.
Because they are robbing banks of their profits, they are bound to be strongly resisted by banks in other countries. Trying to enter these countries and becoming legal are hardly possible.
For instance, for Alipay to enter the U.S. market.
Firstly, Alipay has to lobby the Supreme Court to legalize their payment system in the United States.
At the same time, lobby the legislature of each of the fifty states and finally persuade the Federal Reserve to relax its regulation on banks and modify the financial regulatory law of the Federal Reserve.
Well now.
This path.
Is definitely insurmountable for a company. And such is the case for most Western countries, they simply can’t break in, because they are challenging the interests of all local banks. The law will not allow you to enter.
Plainly put, mobile payments like Alipay were successful in Huaxia because domestic banks didn’t react fast enough and were caught off guard. But to venture into foreign, especially Western markets? That’s impossible.
They won’t give you the opportunity to make your move.
Tang Qing owns a bank.
If such two payment methods exist in the Myanmar Economic Zone, he would simply absorb them into the Myanmar Banking system, or block them out. There’s no way they could coexist peacefully.
There can be no coexistence. This model existed in Huaxia because it was a special market segment that occurred due to the vacuum of market rights and law, facilitating its abrupt rise. But there’s no such opportunity outside Huaxia anymore.
Even in the nearby island country Japan in later years, despite news reports touting its popularity and thousands of registered merchants.
That was only to cater to people from Huaxia traveling there. Among the locals, less than one percent actually used it. And that one percent usually had traveled or worked in Huaxia before. Most Japanese people don’t use it at all.
Those seemingly impressive statistics—tens of thousands of registered Japanese merchants, one percent of user ratio—were essentially meaningless.
The most important thing involved here is interest.
If you pull all the retail investors’ funds into your own accounts, the banks will lose their profits. If you also want to participate in consumer loans, you’re attacking the bank’s foundation. If it extends to all sectors of loan businesses.
Enough said.
Banks would definitely object. These two must be ensnared by the central bank.
Therefore.
The scale of these two parties would be restricted, waiting for the improvement of relevant laws in Huaxia. Although these two methods of payment will not die, they will inevitably be caged, entering a steady developmental trajectory.
Alipay’s and WeChat Pay’s payment systems.
Are natural enemies of all banks.
They chose to fight against the banking system of the entire world.
The outcome wouldn’t be too hard to guess.
