Goldman Sachs announced in December that it will be taking full ownership of its Chinese securities joint venture. Credit: Richard Drew/AP Photo
In December 2004, Goldman Sachs struck an unusual deal to bolster its presence in China. The Wall Street investment bank agreed to “donate” $62 million to pay off the debt of a failed state-owned brokerage house.The money went into a fund that was supposed to compensate investors whose savings had been embezzled by the directors of Hainan Securities, a state-backed firm. In exchange, Beijing granted Goldman a license to operate a joint venture brokerage firm in China.
That new venture, Goldman Sachs Gaohua Securities, was supposed to help the Wall Street firm win privileged access to China’s fast-growing economy and its highly regulated financial services market, which had largely been closed to foreign firms.
The business was only a modest success.
But now, after more than a decade of aggressive lobbying by Wall Street firms and the U.S. government, China has begun to grant foreign firms greater access to its financial markets, allowing global institutions like Goldman
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