The Islamic Finance Handbook: A Practitioner's Guide to the Global Markets

Chapter 6ChinaWhat Chinese Financial Market Players Should Know about Islamic Finance

Wang Yongbao Ahmed Musa

Associate Professor, Xi'an International Studies University

China is home to at least 23 million Muslims, and most of them live in five provinces in the northwest: Shaanxi, Gansu, Qinghai, Xinjiang, and Ningxia. The market potential for Islamic finance is thus huge. If the stability of Islamic finance is recognized by the government of China and the relevant laws and regulations are issued, Islamic finance will prosper. Although the Chinese government still has a conservative attitude toward Islamic finance, it has expressed interest in its development and has become a member of the Islamic Financial Services Board (IFSB).

Although China has not yet officially opened an Islamic financial institution, many conventional financial institutions in China have begun to engage in Islamic financial transactions. The first was Kuwait Finance House–Malaysia, which invested in power equipment in 2006. Another is CIMB Bank of Malaysia, which bought a 19.99 percent share in Bank of Yingkou (Liaoning province) in 2008 and became its largest shareholder. At the end of 2008, the people's government of Ningxia Hui (Muslim) autonomous region proposed to the China State Council that it offer Islamic financial services in the region. In March 2009, a delegate of the Revolutionary Committee of China's Political Consultative Conference proposed Islamic finance development projects in China ...