What a difference two years and a US credit squeeze makes. Once, western financial giants had little interest in China's security firms. Domestic insurance companies yes, retail banks as well, but Chinese stock brokers were seen as the untouchables of China's financial sector.

The government forced through a much-needed overhaul designed to lose the Wild West image by consolidating weaker players and stamping out flagrant abuses. This was followed by a clamp-down on foreign investment and only three western investment banks managed to take small stakes in local firms before the barriers went up.

Fast forward to today and the startling news Citic Securities is to invest $1bn for a 6% stake in Bear Stearns, the US investment bank. Equally surprising, the US firm is reciprocating by spending the same amount for a 2% stake in Citic.

These days, a billion dollars buys you a lot more in Wall Street than it does in China's overheating stock markets. Citic Securities' shares have tripled this year and are worth more than five times book value. Bear Stearns, hard hit by this summer's sub-prime credit crisis, is trading at just 1.2 times book value.

The Financial Times believes the tie-up could mark the beginning of a new era of deal-making as western giants like Merrill Lynch, JPMorgan and Credit Suisse clamour for a piece of the action in China's lucrative securities sector. Chinese players, meanwhile, are on the hunt for foreign acquisitions of their own. Investment bankers, start your motors.

More on the inexorable rise of China's financial firms in this story.

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