China open­ing up fi­nan­cial in­dus­try Main­land quick­ens the pace of change to spur growth and com­pet­i­tive­ness, en­tice global mar­ket in­vestors

China Daily (Hong Kong) - - BUSINESS -

BEI­JING — China has quick­ened the pace of open­ing up its fi­nan­cial mar­ket, to spur eco­nomic growth, raise fi­nan­cial com­pet­i­tive­ness and ac­tively par­tic­i­pate in global mar­kets.

Last month, over­seas in­vestors gained di­rect ac­cess to the Chi­nese main­land’s $10 tril­lion bond mar­ket with the launch of the Bond Con­nect plat­form in Hong Kong.

This will al­low qual­i­fied over­seas in­vestors to trade bonds on the main­land in­ter­bank bond mar­ket, in­clud­ing trea­sury bonds, lo­cal gov­ern­ment bonds, pol­icy bank bonds and com­mer­cial bank bonds.

“The Bond Con­nect is con­ducive to the in­ter­na­tion­al­iza­tion of the main­land’s fi­nan­cial mar­ket and is a driv­ing force for its fi­nan­cial open­ing up,” said Dong Yup­ing, a re­searcher of the In­sti­tute of Fi­nance and Bank­ing at the Chi­nese Academy of So­cial Sciences.

Be­sides the Bond Con­nect, the Chi­nese gov­ern­ment has taken an ar­ray of mea­sures to make its stock mar­ket more ac­ces­si­ble to for­eign in­vestors. Th­ese in­clude the launch of stock con­nect pro­grams be­tween the main­land and Hong Kong bourses, bet­ter reg­u­la­tion of ar­bi­trary trad­ing sus­pen­sions and looser re­stric­tions on Qual­i­fied For­eign In­sti­tu­tional In­vestors.

At the end of July, China’s dol­lar-de­nom­i­nated QFII pro­gram rose to $93.27 bil­lion, with 284 over­seas in­sti­tu­tions re­ceiv­ing quo­tas un­der the QFII pro­gram to move money into the coun­try’s cap­i­tal ac­count.

“Th­ese mea­sures di­ver­si­fied yuan-de­nom­i­nated prod­ucts avail­able for in­ter­na­tional in­vestors and in­creased cross-bor­der trans­ac­tions in the yuan, giv­ing a boost to the cur­rency’s rise as an in­ter­na­tional cur­rency,” Dong said.

The in­tro­duc­tion of for­eign-cap­i­tal banks to the do­mes­tic mar­ket and moves by China’s fi­nan­cial in­sti­tu­tions to go global have also been seen as pos­i­tive steps in de­vel­op­ing the fi­nan­cial sec­tor and build­ing a free and open cap­i­tal mar­ket.

“Open­ing up helps to build a strong and com­pet­i­tive fi­nan­cial sec­tor in China,” said Zhou Xiaochuan, gover­nor of the Peo­ple’s Bank of China, at the Lu­ji­azui Fi­nan­cial Fo­rum 2017 in June.

Zhou said pro­tec­tion­ism and pro­tec­tion­ist be­hav­ior lim­it­ing the par­tic­i­pa­tion of for­eign play­ers in China would lead to lazi­ness and weak­ness, caus­ing poor com- pe­t­i­tive­ness that would hurt the sec­tor’s de­vel­op­ment.

Do­mes­tic com­mer­cial banks have learned a lot from com­pe­ti­tion, with com­pe­ti­tion from for­eign-cap­i­tal banks help­ing China’s fi­nan­cial sec­tor in terms of prod­uct evo­lu­tion, mar­ket build­ing, busi­ness mod­els and man­age­ment ex­per­tise, Zhou said.

The de­vel­op­ment trends of China’s fi­nan­cial mar­ket have at­tracted the at­ten­tion of the in­ter­na­tional fi­nan­cial mar­ket and emerg­ing mar­ket in­dex in­sti­tu­tions, show­ing that the fi­nan­cial sec­tor is com­pe­ti­tion-driven and has ben­e­fited from open­ing up.

Lead­ing global eq­uity in­dex com­piler MSCI an­nounced in June that from June 2018, it would in­clude 222 China A shares in its Emerg­ing Mar­kets In­dex and All Coun­try World In­dex.

Ear­lier in June, the Euro­pean Cen­tral Bank said it had shifted 500 mil­lion euros ($586.3 mil­lion) worth of for­eign re­serves to the yuan dur­ing the first half of this year, ad­ding the Chi­nese cur­rency to its re­serves for the first time.

Economists said this demon­strated that global in­vestors had faith in China’s eco­nomic out­look and fi­nan­cial mar­ket health.

Shi Donghui, a cap­i­tal mar­ket re­searcher at the Shang­hai Stock Ex­change, said the MSCI in­clu­sion was “a vote of con­fi­dence” in China’s ef­forts to push for eco­nomic glob­al­iza­tion and merge into the global fi­nan­cial mar­ket.

Open­ing up helps to build a strong and com­pet­i­tive fi­nan­cial sec­tor in China.” Zhou Xiaochuan, gover­nor of the Peo­ple’s Bank of China

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