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considerably in anticipation of a large increase in business in China, any liberalisation seems likely to be limited until the banks in China are better able to
compete.
48.
(e) China's presence in Hong Kong's
financial sector
As a by-product of China's financial development, China's presence in Hong Kong's financial sector has strengthened significantly in recent years. With the opening up of the Chinese economy to the outside world, banks in China, particularly those with branches in Hong Kong, have much greater opportunities to do business with foreign firms. The Bank of China (BOC) Group has expanded very substantially, in line with China's modernisation programme and the growth of trade, as well as with the need to raise domestic and international capital. Locally, this expansion is partly a result of the competitive pressures imposed on it by other financial institutions in Hong Kong, and partly a reflection of its objective of increasing its profits and enlarging its market share. Assisted by computerisation, the retail banking network and deposit base of the BOC Group have both expanded to become the second largest in Hong Kong, after the Hongkong Bank Group. During the period 1983 to 1985, when some local banks experienced financial difficulties, quite a number of depositors may have shifted their deposits to the BOC Group.
49.
Adopting a more outward looking strategy, the BOC Group's financial activities in Hong Kong have also undergone a major change in nature, with a shift from the traditional China-related banking business to a widely diversified range of financial services including mortgaging, loan syndication, brokerage in shares and
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