Room seen for finance sector reform

There is more room for further opening-up by China in the financial sector, with more efforts to focus on three areas — capital account convertibility, market-oriented exchangerate reform and market access expansion for domestic and foreign investment — according to Yi Gang, governor of the country’s central bank.

“Compared with the requirements for China’s economic and financial development in the new era, there is still huge room for the opening-up of our financial sector to domestic and foreign investment,” Yi, governor of the People’s Bank of China, said on Tuesday at the 2018 Annual Conference of Financial Street Forum in Beijing. “China will take advantage of the further opening of its financial sector as a crucial way to improve the quality of financial services.”

At the end of 2017, total assets of foreign banks in China accounted for 1.3 percent of that of China’s banking sector, falling from 2.3 percent in 2007. It shows that the growth in assets and liabilities of foreign banks in the country is slower than that of the banking sector, Yi said.

“Opening-up the financial sector does not mean China will leave the door wide open without supervision. During the process, financial administrators will step up regulation by law and insist on having a financial business operating with an appropriate license,” the governor added.

He emphasized that China should follow three principles in promoting financial sector opening-up. First, the country will adopt pre-establishment national treatment and a negative list. Second, financial sector opening-up will go in tandem with the progress of exchange rate reform and capital account convertibility. Third, financial regulatory capacity should match the openness of the financial sector to prevent financial risks.

Chinese economists saw financial opening-up as an opportunity to develop the local service sector, but it also requires high-standard regu-

Opening-up the financial sector does not mean China will leave the door wide open without supervision.”

Yi Gang,

latory measures to prevent potential market vulnerability.

“For financial opening-up, the sequence is very important, and it needs support from reform measures at the same time,” said Huang Yiping, a member of the central bank’s monetary policy committee.

“Both macro and micro prudential financial regulations are required to maintain financial stability and ensure investors’ benefit,” Huang added.

China Investment Corp’s executive vice-president, Qi Bin, said one measure to further open the financial service sector is to facilitate cross-border investment. A rise of crossborder investment will help ease trade tensions and lower the market threshold for foreign investors, which “will substantially develop the local financial market”, Qi said.

Also on Tuesday, Fang Xinghai, vice-chairman of the China Securities Regulatory Commission, vowed to maintain financial stability and prevent asset price bubbles while accelerating the opening-up of the country’s financial markets to foreign investors.

Fang said the first product under the much-anticipated Shanghai-London trading link could be available by the end of the year. The trading link will allow investors from each country to trade shares listed on the other’s stock exchange.

Li Xiang contributed to this story.