Source: Global Times Published: 2019-5-7
China is progressively implementing its policy direction to open up the financial sector and provide a level playing field in terms of ownership requirements for overseas and domestic capital, with experts predicting that financial opening-up will accelerate in the next few years.
For example, the local government in North China's Tianjin Municipality just scrapped the foreign ownership caps for Tianjin-based Chinese banks and financial asset management companies, according to a statement published on the government's website on Monday.
Tianjin will also support overseas banks to set up both branches and subsidiaries locally, as well as encourage them to engage in yuan business, the statement noted.
Tianjin's action to open the banking sector happened almost at the same time as the China Banking and Insurance Regulatory Commission (CBIRC) prepared to launch new measures to further open up the domestic financial sector, particularly banking and insurance.
Guo Shuqing, chairman of the CBIRC, told the media on May 1 about 12 new measures that the CBIRC would launch shortly. According to Guo, China would simultaneously scrap the ownership caps on domestic banks and overseas banks in domestic financial banks.
The government would also scrap the asset requirements for overseas banks to set up branches in China, as well as allow overseas insurance groups to set up insurance organizations in China, according to Guo.
Both the moves by Tianjin and the pending measures of the CBIRC are implementations of the government's call for financial opening-up, said Zhou Yu, director of the Research Center of International Finance at the Shanghai Academy of Social Sciences.
"The central government has set the tone for financial opening-up, and government departments and local governments will implement this process with detailed regulations and moves. But this takes some time and the implementation speed might differ in different regions," Zhao Xijun, deputy director of the Finance and Securities Research Institute at the Renmin University of China, told the Global Times on Tuesday.
"Overall, China's financial opening-up is pushed both by internal need, as Chinese companies are also doing business over the border under the call of the Belt and Road Initiative, and by external pressure, particularly from the US, pushing China to open its financial industry to overseas investors," Zhao said.
According to Zhou, China has already quickened its steps in opening the financial sector in recent years.
"In the past, many were worried about the possible risks brought by such opening-up, but now those risks have eased with China's financial sectors becoming mature and resilient enough to withstand outside blows, so the government is more daring in launching opening-up measures," Zhou told the Global Times.
Zhou also estimated that in the next few years, such financial opening would accelerate. With reforms mostly completed in the banking sector, opening measures would focus on the securities sector, which now lags behind in opening up.
Zhao Xijun is senior fellow of Chongyang Institute for Financial Studies at Renmin University of China.