CHINA Resources' finally taking a substantial stake in the Hongkong Chinese Bank (HKCB) gives the trading conglomerate a local banking arm - and there are benefits for both sides. Coming as it does when mainland banks are exercising self-restraint on lending and as the looming credit crunch is expected to start taking its toll on mainland enterprises, acquiring a 50 per cent holding in a Hongkong bank - with the other 50 per cent held by Lippo Group unit HKCB Holdings - reflects excellent timing. For Hongkong banks, the future hinges to a large extent on their China strategy. Developing the mainland market requires relationships and a powerful partner, while mainland giants have always been eager to equip themselves with banking support. China International Trust and Investment Corp (CITIC) and China Merchants Holdings snapped up ailing banks in 1986. Ka Wah Bank is 60.8 per cent owned by CITIC and about 47 per cent of Union Bank's shares are held by China Merchants. First Pacific Bank also chose to face its end-of-August listing with the backing of two strong arms of the Ministry of Foreign Economic Relations and Trade - China Trust and Investment Corp for Foreign Economic Relations and Trade, and China National Metals and Minerals Import and Export Corp. The clampdown on rampant lending activity in China has seen the search for financial institutions assume some degree of urgency. CITIC Pacific, a subsidiary of CITIC, took a 20 per cent stake in the recently listed Manhattan Card Co, the credit card business of Chase Manhattan Bank. As for the marriage between HKCB and China Resources, Lippo managing director John Lee Luen-wai described the immediate benefits to both parties. ''China Resources undertakes to place a substantial amount of business with the bank shortly and with the annual turnover for China Resources running at $50 billion a year, the benefit to HKCB could be immense,'' he said. ''For China Resources, the profit generated from its business need not be shared with other bankers. Instead, China Resources can get some back.'' Although HKCB is much smaller than Union Bank or Ka Wah, Lippo is determined to build it up. With plans in place to open four more branches this year in Hongkong and one joint-venture bank in Shenzhen, Mr Lee vows to make it into ''a bank of considerable scale''.