An Analysis About The Paradox Of Profitability In Chinese Banks

China's rapid growth momentum of economy has been the focus of world's attention. Visibly, the third industry has been leading a more and more important weight in the economic growth. Joining in the WTO in 2000, it is not only an opportunity but also a challenge to China, especially in the third industry, we can learn more knowledge and experience in technology. And it is the same to the bank industry which is the core of the financial system. According to the schedule which was determined by WTO, some foreign banks in China have taken a series of access to decision-making, and the competition between the two country's banks is becoming more and more severe.This paper firstly does some research on the causes of the entry of the foreign banks, We use FDI,data of international trade,the number of foreign banks' Branches in China,the repressions of foreign banks in China as variables, on base of which we can get a further discussion on profits of China banks. On the research of the profits of Chinese banks, this article uses some tools such as Herfindahl-Hirschman index to analyze the object. After counting and inference, we get a conclusion named "paradox of profit", which says that competitive pressure taken by the entrance of foreign banks has not result in reducing the profits of native banks. On the contrary, it made our profit significantly improved. On analyzing the "paradox of profits", the article takes the method such as rate of market concentration, at the same time, we plus some chart to analyze the object on the aspect of economics of scale. We get the conclusion: the relax ion of state-owned commercial banks,Joint-stock banks' effective utilization of funds and market development capability are the main causes of the "paradox of profit". At the same time, native banks reduce the management cost because of the corporation with international companies.The third,fourth and fifth parts are the main parts. The third part mainly discusses the causes of the entry of foreign banks; the fourth part mainly discusses the native banks' profits which were after the entry of foreign banks, this part also analyzes the cause of higher profits. And the fifth part is the conclusion of the third one and fourth one; it also gives some advice on native banks.