Central bank reveals measures to further open finance sector

China’s central bank governor yesterday announced specific measures aimed at further opening the country’s financial market will be implemented this year.

Yi Gang’s announcement, made at the Boao Forum for Asia annual conference, follows President Xi Jinping’s declaration to broaden China’s market access and expand reform and opening-up. 

According to Yi, six measures will be in place “in the coming months,” such as increasing the threshold of foreign ownership to 51 percent in securities, funds, futures and life insurance joint ventures, and phasing out the cap over three years.

The central bank governor said the country will remove foreign investment cap on banks and asset-management companies, and provide national treatment to foreign financial institutions in the next few months.

Joint-venture brokerages will not be required to have at least one securities firm among its domestic shareholders, Yi added.

To boost the interconnectedness between the Chinese mainland and Hong Kong exchanges, the daily trading quotas on the Shanghai-Hong Kong and Shenzhen-Hong Kong stock connect schemes will be quadrupled from May 1 onward.

Qualified foreign investors will be allowed to conduct insurance brokerage and assessment business in China, and foreign-funded insurance brokers will enjoy the same business scope as their Chinese counterparts, Yi said.

Before the end of 2018, China will encourage overseas investors to enter its trust, financial leasing, auto finance, money brokerage and consumer finance sectors.

As for the newly set financial asset investment and wealth-management companies initiated by commercial banks, there will be no more caps on foreign ownership.

China will also “substantially” expand the business scope of foreign banks and impose no restrictions on the business scope of joint-venture securities companies, Yi said.

Requirements will be removed for foreign-funded insurers to have representative offices for two years in China before they set up businesses.

Yi said that thanks to the joint efforts between China and the United Kingdom, the preparatory work of the Shanghai-London stock connect program is “progressing well” and the scheme will be launched this year.

China is delivering its promises on liberalizing the market access restrictions on banking card settlement agencies and non-bank payment institutions, relaxing its restrictions on credit rating services by foreign players, and providing national treatment to foreign capital when they invest in credit information companies in the country.

Yi noted that all these opening-up measures are “advancing smoothly.”

He said all relevant departments are now working to amend laws, regulations and related procedures to ensure the timely implementation of the new measures. The central bank will strengthen financial supervision and maintain the financial stability while expanding the opening-up of the financial sector.

The research team led by Betty Wang and David Qu at the Australia and New Zealand Bank (China) said Yi’s speech confirms China’s reform commitment, and they view the latest details about the opening-up of the financial market as “a positive move.”

The research team believes the detailed roadmap will help to boost China’s further integration into global financial markets, including the possibility of Chinese bonds being included in global bond indexes.

The Australian lender said that although some of the commitments were made last year following United States President Donald Trump’s visit to China, it marks the first time that China has provided a clear timeline on its financial market opening-up plans since the 19th National Congress of the Communist Party of China last October.