How is the circle squared? As in some other countries, MasterCards in China are more debit than credit cards: cardholders must deposit money into their accounts. Purchases are deducted from these funds.

MasterCard's success in China is thus more an indictment of the country's dreadful banks than a capitalist celebration of plastic.

Almost all transactions are between businesses for big-ticket items such as tractors and trainloads of raw materials. Chinese companies often use credit cards rather than cheques or wire transfers to buy goods and services from each other.

In the mid-1980s, when MasterCardentered the market, the clearing system between banks in different cities was (and is) almost non-existent: a cheque could take up to a month to clear, and many sellers would not release goods until it did. The country did not have the nationwide telecommunications networks necessary for an electronic clearing system. Company executives were forced to carry suitcases of cash if they wanted to seal a deal on the spot.

MasterCard uses people at the end of a telephone to approve a purchase rather than computerised links, thus making do with what is available.

But the company's best days in China may be over. In 1999, the government plans a nationwide electronic clearing and settlement system to connect financial institutions. Still, MasterCard may not be too worried. These,after all, are Chinese banks: expect delays.

-- The Economist