Beijing's decision to allow Citibank to issue credit cards independently signals an easing on restrictions of foreign players in the sector, an area that the World Trade Organisation and some economists say has been too slow to reform.
Eager to tap into the China's booming consumer business, Citibank is the second foreign bank and the first Western one to receive permission from the China Banking Regulatory Commission to issue a stand-alone credit card on the mainland, following the Bank of East Asia.
'This approval represents a significant milestone in the continued expansion of Citi's business in China, a priority market for Citi,' said Stephen Bird, CEO of Citi Asia-Pacific.
The business will include both retail and commercial cards and is expected to be launched later this year.
Usually Beijing requires foreign banks to 'co-brand' with Chinese operators to issue credit cards, and requires yuan-denominated credit card transactions to go through China UnionPay, the nation's largest electronic-payment network, established by more than 80 banks and other state-owned companies.
And it refuses to allow foreign banks to issue credit cards in a separate currency, for example US dollars, sparking WTO complaints. Beijing's refusal to permit companies like Visa, American Express, MasterCard to process card transactions on the mainland independently has also sparked complaints to the WTO.
Citibank declined to comment on the issue.