China announces long-awaited steps to open up financial services sector

10 November, 2017, 15:51 | Author: Leticia Walters
  • China just announced a key step in opening its markets to foreign investors

China's financial services sector will be nearly entirely open to foreign players in the next five years, according to China's deputy finance minister Zhu Guangyao.

However, it is unlikely that it was the intervention by Trump that caused the change of policy, with the timing likely to have been somewhere between coincidence and expedience. Vice Finance Minister Zhu Guangyao said that foreigners could now own banks, brokerages and asset management companies in China. Global banks are now limited to owning 49 percent of local securities joint ventures, frustrating their attempts to compete effectively with Chinese rivals.

China observers will see this as a victory for the liberalising tendencies of the outgoing central bank governor Zhou Xiaochuan, who said earlier this year that lack of foreign competition had made Chinese financial institutions "lazy".

In addition, China will lift the foreign ownership cap to 51 percent for life insurance firms after three years and remove the cap after five years, Zhu said, adding that regulators are drafting the details which will be released soon.

China has already taken steps to gradually open up its $40 trillion financial sector, including allowing foreign investors greater access to its equities and debt markets through trading links with Hong Kong.

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