25 Jul 2017

GREAT FIREWALL OF CHINA: 4 ELEMENTS FOR SUCCESSFUL TRADING

With promising GDP figures announced, how can traders tap into the high-growth Chinese market?

China has recently increased internet restrictions, with a further crackdown on Virtual Private Networks (VPN), which are a popular method of avoiding government restrictions and surveillance.

The Great Firewall of China and the Golden Shield Project have become even more obstructive with the twelve-month project aiming to secure the nation’s internet borders now in full swing.

Despite this, the country has exceeded expectations with its GDP growth of 6.9% in the second quarter as well as increased demand for low-latency connectivity into China, particularly between the Shanghai Futures Exchange (SHFE) and the Chicago Mercantile Exchange (CME) Chicago.

Over the years, Chinese brokerages and international firms remotely trading in China have invested heavily in their connectivity only to be plagued by poor latencies and unsatisfactory performance.

FX traders in China face similar threats, albeit also from a regulatory perspective.

SAFE, the Chinese foreign exchange regulator, implemented strict new regulations back in January aimed at preventing large sums of money from leaving the country – $50,000 per individual annually.

For FX brokers, it’s another layer of unwanted complexity. The same applies to global organizations looking to acquire high-wealth clients in China.

That said, even with these disruptions in mind, China remains a lucrative trading location for many and shouldn’t be avoided simply because international openness has taken a backseat.

4 Elements for Success

Successfully connecting to China requires four elements.

  1. Extensive knowledge of the local telecoms landscape

  2. Regulatory compliance

  3. A healthy dose of patience

  4. Plenty of accurate market information

For businesses with an established customer base in China, keeping abreast with regulatory changes is crucial.

For brokerages working on the London Metal Exchange and the Shanghai Futures Exchange, trading volumes drop as Chinese investors go on holiday and then inevitably spike again when they return. Can your network cope with and anticipate such changes without impacting your business?

With the ever-changing dynamics of the Chinese market, it’s imperative your connectivity reacts accordingly.

Our mission is to keep you informed so you can focus on what’s important – maximising the opportunities a country with over 700 million Internet users offers.

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