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China opens its financial system for foreign investors
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Loading...China has made a major step towards to opening of its financial system, saying it would remove restrictions on foreign bank and asset management companies, while allowing overseas companies to hold majority stakes in local securities and insurance companies.
Yesterday, the Chinese Foreign Ministry said barriers to entry into sectors such as banking, insurance, securities and funds would be "significantly" alleviated "in line with China's own schedule and roadmap."
The new rules, announced on Friday in a government briefing, will give world financial companies unprecedented access to the world's second-largest economy. The announcement coincides with Donald Trump's visit to Beijing and supports the accreditation of Chinese President Xi Jinping less than a month after he established his status as the most powerful leader in the nation in recent decades.
Those entering China will face many risks, including the competition of state players and the threat of growing arrears, but optimists among market players believe the opening will create new opportunities for foreign firms and make the local financial system more competitive, effective.
* Foreign companies will have the right to hold shares of up to 51% in securities; China will remove restrictions on foreign ownership for securities companies three years after the new rules came into force.
* The state will raise the ownership limit to 51% for life insurance companies after three years and will lift the limit after five years
* The ownership restrictions of the fund management companies will be increased to 51%, and then completely eliminated after three years.
Foreign financial companies applauded the decision, such as JPMorgan Chase & Co. and Morgan Stanley said in a statement that they are engaged with China. UBS Group AG said it would continue to push for an increase in Chinese joint venture.
Source: Bloomberg Pro Terminal
Jr Trader Petar Milanov
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