Lux­em­bourg opens doors to Chi­nese in­vestors

China Daily European Weekly - - BUSINESS - By CHEN JIA and ZHUANG QIANGE

Lux­em­bourg, the sec­ond-largest fi­nan­cial hub of the Euro­pean Union, wel­comes Chi­nese in­vestors and ex­pects China to open its mar­kets fur­ther and carry out more eco­nomic re­forms, its fi­nance min­is­ter says.

“We’re look­ing for­ward to see­ing how the fi­nan­cial mar­ket is go­ing to open up more in China in the near fu­ture, and very ea­ger to hear what de­ci­sions are go­ing to be an­nounced af­ter the 19th Na­tional Congress of the Com­mu­nist Party of China,” Pierre Gramegna says in an ex­clu­sive in­ter­view.

“Europe and China are re­ally to­day on the same line as they to­gether pro­mote bi­lat­eral trade and in­vest­ment, which will strengthen the re­la­tion­ship be­tween the two sides,” he says.

With the UK leav­ing the Euro­pean Union, Lux­em­bourg, which holds sec­ond place af­ter Lon­don as a fi­nan­cial cen­ter in Europe, is at­tract­ing more Chi­nese fi­nan­cial in­sti­tu­tions to con­duct their busi­ness and es­tab­lish branches or sub­sidiaries in the coun­try.

“We should not over­dra­ma­tize the im­pact of Brexit, (but) many Chi­nese banks have also found so­lu­tions in Lux­em­bourg (that they see) as another en­trance to the EU Sin­gle Mar­ket,” Gramegna says.

Seven Chi­nese banks have opened sub­sidiaries or branches in Lux­em­bourg. They in­clude Bank of China, In­dus­trial and Com­mer­cial Bank of China and China Con­struc­tion Bank.

“Lux­em­bourg now has 50 bil­lion yuan ($7.5 bil­lion; 6.4 bil­lion eu­ros; £5.6 bil­lion) of RMB Qual­i­fied For­eign In­sti­tu­tional In­vestors,” Gramegna says. “This will con­tinue to pro­mote the ren­minbi’s in­ter­na­tion­al­iza­tion by in­creas­ing its us­age in trade and in­vest­ment in Lux­em­bourg.”

So far, Lux­em­bourg has been the sec­ond-largest global des­ti­na­tion for in­vest­ment funds in­vest­ing in China. About 65 per­cent of all Euro­pean in­vest­ment funds that in­vest in the Chi­nese main­land are based in Lux­em­bourg, ac­cord­ing to data from Lux­em­bourg for Fi­nance, a pub­licpri­vate part­ner­ship be­tween the Lux­em­bourg gov­ern­ment and the Lux­em­bourg Fi­nan­cial In­dus­try Fed­er­a­tion.

The Com­mis­sion de Sur­veil­lance du Secteur Fi­nancier, the coun­try’s fi­nan­cial ser­vice reg­u­la­tor, has also paved the way for Euro­pean funds to ac­cess the Chi­nese in­ter­bank bond mar­ket and the A-share mar­ket.

The fi­nan­cial sec­tor is re­garded as the first pil­lar of Lux­em­bourg’s econ­omy. Funds based in the coun­try in­vested 1.42 tril­lion eu­ros ($1.7 tril­lion) in euro-area cor­po­ra­tions and govern­ments in 2016, with a fur­ther 358 bil­lion eu­ros in­vested in other EU mem­ber states, ac­cord­ing to the United Na­tions Con­fer­ence on Trade and Devel­op­ment.

“Lux­em­bourg has many es­tab­lished frame­works for fi­nan­cial ac­tiv­i­ties,” says Paul Junck, man­ag­ing direc­tor of the Lux­em­bourg Pri­vate Eq­uity and Ven­ture Cap­i­tal As­so­ci­a­tion.

“With reg­u­la­tors be­com­ing more pro­fes­sional, gov­ern­ment more proac­tive, and given Brexit, the coun­try is play­ing an in­creas­ingly vi­tal role as a fi­nan­cial cen­ter in Europe and in the world.”

As key to the devel­op­ment of both Lux­em­bourg and China, in­vestors from both sides have been keen to find the right op­por­tu­ni­ties in each other’s mar­ket, and reg­u­la­tors on both sides are sup­posed to in­crease the ceil­ing for in­vestors to fos­ter open trade, Junck says.

“In Lux­em­bourg, there are bil­lions of dol­lars com­mit­ted to the fi­nan­cial sec­tor yet wait­ing to be in­vested,” he says. “China has al­ready laid a solid foun­da­tion for op­er­at­ing fi­nan­cial busi­nesses, and Lux­em­bourg can of­fer ad­vice to in­vestors about the com­plex­i­ties in Euro­pean mar­kets.”

Con­tact the writ­ers at chen­jia@chi­

Pierre Gramegna

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