ANNUAL REPORT

174
Table 3:
Exposure of Four Largest U.S. Banks to China,
First Quarter of 2016
U.S. Bank
Exposure to China
(US$ billions)
Consolidated Assets
(US$ billions)
China’s Share
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J.P. Morgan 14.4 2,015.7 0.7%
Wells Fargo 1.4 1,667.8 0.1%
Bank of America 10.0 1,653.9 0.6%
Citigroup 17.9 1,342.6 1.3%
TOTAL 43.7 6,680.0 0.7%
Note: Exposure includes loans, investment securities, and trading and investments. Ranking
of four-largest banks based on Federal Reserve ranking of U.S.-chartered commercial banks by
consolidated assets as of March 31, 2016.
Source: J.P. Morgan, ‘‘Form 10–Q,’’ March 31, 2016; Wells Fargo and Company, ‘‘Form 10–
Q,’’ March 31, 2016, 25; Bank of America, ‘‘Form 10–Q,’’ May 2, 2016, 88; Citigroup, ‘‘Form 10–
Q,’’ 82; and Federal Reserve of the United States, ‘‘Insured U.S.-chartered Commercial Banks
That Have Consolidated Assets of $300 Million or More, Ranked by Consolidated Assets as of
March 31, 2016,’’ March 31, 2016.
Limited direct U.S. exposure aside, the impact of China’s slowing
growth and economic reforms on trade, commodities demand, and
investor confidence is affecting global financial markets. 279 Given
China’s close trade ties with the rest of Asia, investors shift capital
in and out of the region based on their expectations of China’s economic
health. Changes in China’s economic growth and reform
agenda can lead to shocks in U.S. and Asian stock markets. 280
Steps toward loosening capital controls and promoting the internationalization
of the RMB are increasing China’s presence in the
international financial system, deepening China’s financial linkages
with the rest of the world. 281 More global investors are able
to invest in China’s stock and bond markets, and more Chinese investors
are able to invest internationally. As the Chinese government
continues to loosen capital controls, the pool of Chinese investors
widens and will shift investments away from U.S. Treasury
bonds, preferred by Chinese government investors, toward higherreturn
investments. 282 The rising importance of the Chinese economy
combined with the Chinese government’s promotion of the
RMB as an international currency may gradually erode the dollar’s
dominant role as a unit of account for international trade and
cross-border financial transactions. At present, however, the RMB
does not pose a serious challenge to the U.S. dominant reserve currency
status. 283
Conclusions
• The 13th Five-Year Plan (FYP) (2016–2020) seeks to address
China’s ‘‘unbalanced, uncoordinated, and unsustainable growth’’
and create a ‘‘moderately prosperous society in all respects’’
through innovative, open, green, coordinated, and inclusive
growth. This agenda strengthens the Chinese Communist Party’s
and Chinese government’s roles in managing the economy while
allowing a greater role for markets to determine the allocation of
resources in some sectors of the economy.
• The success of the 13th FYP agenda hinges on the Chinese government’s
willingness to make politically difficult tradeoffs between
contradictory policy objectives, overcome entrenched inter-
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