China’s central bank governor on Wednesday announced six measures and disclosed a timetable to further open up the country’s financial sector, following Chinese President Xi Jinping’s declaration at the Boao Forum for Asia (BFA) annual conference to further widen market access to foreign investors.
The opening-up policies will be implemented in the coming months, according to Yi Gang, governor of the People’s Bank of China (PBOC) .
The PBOC and finance regulation departments are working on these policies and making the sector more globally competitive under the deployment of the Communist Party of China Central Committee and State Council, said Yi at the BFA annual conference in southern Hainan Province.
According to the policies, foreign equity restrictions on banks and financial asset management firms will be canceled, with equal treatment for domestic and foreign-funded institutions. Foreign banks will be allowed to set up branches and subsidiaries in the country, Yi said.
In addition, foreign businesses will be allowed to own up to 51 percent of shares in securities, funds, futures and life insurance joint ventures, and the cap will be phased out over three years, he added.
Securities joint ventures will not be required to have at least one securities firm among its domestic shareholders.
To further improve the Hong Kong-Shanghai and the Hong Kong-Shenzhen stock links, Yi announced that the daily northbound quota will be increased to 52 billion yuan ($8.3 billion) from the current 13 billion yuan, and the daily southbound quota would be increased to 42 billion yuan from the current 10.5 billion yuan. .
He also said that qualified foreign investors will be allowed to conduct insurance brokerage and assessment business in the country. Foreign-funded insurance brokers will have the same business scope as their Chinese counterparts.
Other measures will also be taken to open up the financial sector before the end of the year, Yi added.
For instance, foreign investors will be encouraged to enter trust, financial leasing, auto financing, money brokerage, consumer finance sectors and other financial sectors.
No foreign ownership limits will be set for new financial asset investment and wealth management companies initiated by commercial banks, he said.
The country will also substantially expand the business scope of foreign banks, and impose no restrictions on the business scope of joint-venture securities companies, Yi disclosed.
In addition, the country will remove the requirement that foreign insurance companies must have had representative offices for two years before they set up businesses in China.
Yi added that finance regulation departments are in the midst of procedures to modify laws and regulations and trying to implement them.
To accelerate the opening up of the financial sector, the central bank will also take supporting measures to strengthen supervision over it, Yi said.
While broadening market access to foreign investors and widening their business scope, the central bank will enact equal and prudent supervision for all enterprises under various ownerships based on laws and regulations, he added.
Through strengthened financial supervision, the central bank hopes to effectively prevent and defuse financial risks and keep the financial sector stable, the governor said.