Shanghai Pilot Free Trade Zone issues new preferential policies for foreign financial institutions

Foreign financial institutions will be allowed to establish a branch and subsidiary at the same time while foreigners can own majority stakes in domestic life insurance companies in Shanghai Pilot Free Trade Zone.

These will be possible under 25 new rules issued by the Shanghai Pilot Free Trade Zone Administration today in the FTZ's latest effort to test the ground for further liberalization of the economy to widen the opening-up of its financial sector.

Under the rules commercial banks are allowed to form financial asset investment and management companies without any cap on foreign ownership.

Foreign banks are also urged to engage in a wider range of businesses, such as trust, financial leasing, auto finance, money broking, consumer finance and other banking sectors.

The FTZ also encourages foreign-funded securities firms and insurance companies to entice foreign investors as major shareholders of stock brokerages, fund management companies and futures companies.

Overseas central banks and international financial bodies are allowed to establish their representative offices or branches in the FTZ, while rating agencies are allowed to conduct credit rating business in the interbank bond market.

The new rules support leading trans-national asset management companies to set up their regional headquarters in the FTZ to build a comprehensive development platform for asset management in the zone. They will also be allowed to help found the Lujiazui Asset Management Association.

The new rules also allow foreign institutions to form financial leasing companies in the FTZ.

The FTZ will also urge the Shanghai Stock Exchange, the Shanghai Futures Exchange and the China Financial Futures Exchange to cooperate with “Belt and Road” countries and regional financial markets.

It will enhance strategic cooperation with the offshore yuan market to promote the issuance of yuan bonds and asset securitization products by overseas institutions and enterprises. It will also encourage financial institutions of “Belt and Road” countries to establish branches in the FTZ.

The new rules also encourage foreign-funded financial institutions to help build Zhangjiang Science City and set up branches there. Overseas investors are allowed to invest in sci-tech startups through a “qualified foreign limited partner” scheme. 

Qualified overseas talents can open free trade foreigner accounts at financial institutions in the FTZ, and their lawful earnings in China are deemed as overseas capital investment to help them start a business.

The FTZ will also create a multi-level financial dispute resolution mechanism in line with international rules as well as an integrated financial supervision platform to monitor financial risks.