China to ease restrictions in financial sector
China will end ownership limits for foreign investors in its financial sector in 2020, a year earlier than scheduled, Premier Li Keqiang said yesterday.
China will also further open its manufacturing sector, including the auto industry, while reducing its negative investment list that restricts foreign investment in some areas, Li told the World Economic Forum in the northeastern Chinese port city of Dalian.
“We will achieve the goal of abolishing ownership limits in securities, futures, life insurance for foreign investors by 2020, a year earlier than the original schedule of 2021,” Li said. “China will unswervingly promote opening-up on all fronts.”
China is moving forward the schedule to show the world that it will not stop opening up its financial sector, Li said, adding the government will also reduce restrictions next year on market access for foreign investors in the value-added telecoms services and transport sectors.
The country will support foreign investment in advanced manufacturing industries such as electronic information, equipment manufacturing, medicine and new materials, and in the central and western regions, Li said, adding that favorable policies will be unveiled concerning the equipment imported for self-use, corporate income tax and land supply.
Li also pledged to implement the commitment to give national treatment to foreign-funded institutions in areas of credit information, credit rating and payment.
The two-way opening of China’s bond market will also be expanded, he said.
On Sunday, China cut the number of sectors subject to foreign investment restrictions, a widely expected move, to 40 from 48 in the previous version, published in June last year.
On Saturday, leaders of the Group of 20 major economies warned of growing risks to the global economy but stopped short of denouncing protectionism, calling instead for a free and fair trade environment after talks some members described as difficult.
Echoing the sentiment, Li said protectionism is rising, but did not make references to specific economies.
“In the face of pressure from a slowing global economy, I believe people are all in the same boat. We should promote the spirit of partnership, carry out equal consultations, seek common ground while reserving differences and manage and control disputes,” Li said.
“Currently, global economic risks are rising somewhat, international investment and trade growth are slowing, protectionism is rising and unstable and uncertain factors are increasing,” Li said.
“We should actively cope with this. Some countries have taken measures including cutting interest rates, or sent clear signals on quantitative easing.”
But China will not resort to competitive currency devaluation, Li said, and will keep the yuan exchange rate basically stable at a reasonable and balanced level.
The country will further lower the overall level of tariffs, strive to remove non-tariff barriers, and actively expand imports of goods and services.
Li said the country is formulating supporting regulations for the implementation of the foreign investment law, all of which are going to come into effect on January 1 next year.
China will protect intellectual property rights with greater efforts, implement the system of punitive damages of infringement and strictly crack down on infringement and counterfeiting.
China is likely to hit its economic growth target of 6-6.5 percent this year provided the trade dispute with the United States does not worsen, and hence will not need “very big” stimulus measures to prop up growth, a central bank adviser said on Monday.
The People’s Bank of China has already slashed the amount of cash banks must hold as reserve six times since early 2018 to help turn around soft credit growth, and more cuts are widely expected in coming months.
It has also injected large amounts of liquidity into the financial system and guided short-term interest rates lower, while ramping up infrastructure spending and cutting taxes.