Following a successful outcome of the inspection by People's Bank of China, Citibank has been authorized to issue the Renminbi debit cards to its retail customers in China. It is likely that other banks will follow suit, creating an opportunity for issuers to extend the authorization to credit card issuance.China has become one of the most attractive overseas markets for expansion due to its rapidly growing economy and an emerging middle class. In addition to changes in regulation, this has created a more competitive environment in the country over the last two years. Indeed, Citibank became the third foreign institution to receive such authorization, after Bank of East Asia and Standard Chartered, while its rival HSBC is currently awaiting approval. At the same time, the payment card market has developed rapidly and the use of cards is growing strongly. At the end of 2006 there were 1.08 billion debit cards in China, accounting for 95.6% of total cards in issue. Furthermore, the spending on cards reached CNY1.89 trillion ($277.2 billion) in 2006, representing 97% growth compared to the previous year.While credit cards constitute a relatively small share of total cards in issue the growth in the number of cards has been impressive. Most recent figures show that the number of credit cards has grown by 82% on the previous year and reached 90.26 million cards in circulation by the end of 2007. Citibank has been involved in issuing credit cards in China since 2004 through its partnership with Shanghai Pudong Development Bank. This has been an important strategic move for the bank, particularly given the fact that most developed economies are reaching a saturation point in the credit card market. The economic growth and growing wealth among Chinese consumers will create more opportunities for Citibank to grow. Furthermore, the low penetration in the credit card market is likely to encourage foreign issuers to start competing more aggressively in the card issuing space. This will involve gaining additional approval from the Chinese government to begin issuing credit cards. As foreign players which specialize in credit cards bring their expertise and know-how to the market, a more competitive environment will be created. This, in turn, will pave the way to a more dynamic marketplace.

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