In recent years, the Chinese government has been gradually relaxing its regulatory muscles to enable foreigncapital to flow into the banking industry in the People’s Republic of China (the “PRC”). The relaxation triggers acompetition among foreign investors for entry into the Chinese market to get “a piece of the big pie” 1. Theupsurge of mergers and acquisitions of domestic banks by foreign investors calls for the standardization of theoperations of the PRC banking system, and, at the same time, escalates the conflicts arising from the inherentdeficiency in the system. Therefore, it is a pressing issue to determine how to improve the regulation of the PRC banking industry so that such regulation can take the initiative in incorporating, instead of passively adapting to,
the latest development in the industry.