China to ‘sharply’ expand financial market opening
BOAO, CHINA: China will sharply expand market access for foreign banks and securities and insurance companies, especially in its financial services sector, Premier Li Keqiang said yesterday.
The government will also work on more favourable policies for foreign investors to trade Chinese bonds, Li said in a speech at the annual Boao forum held on China’s southern island of Hainan.
“We are quickening the full opening of market access for foreign investors in banking, securities and insurance sectors,” he said.
Li’s remarks add to speculation that China may soon announce new rules that will allow foreign banks and insurance firms to increase their presence in China, as senior officials from China and the United States are due to meet in Beijing this week for the next round of trade negotiations.
China has pledged to further open its massive financial markets to foreign investors since last year amid a simmering trade war with the United States.
Foreign businesses have long complained that liberalisation has been too narrow and on-theground implementation spotty.
Sources told Reuters on Wednesday that the United States and China have made progress in all areas under discussion in trade talks, with unprecedented movement on the touchy issue of forced technology transfers as China had put proposals on the table that went further than in the past, but sticking points remain.
Li said the business scope of foreign banks, as well as market access for credit rating companies, bank card settlements and non- bank card payments, will all be ‘expanded sharply’, with restrictions on the scope of foreign securities companies and insurance brokers expected to be removed.
“Such measures will be implemented this year in a relatively forceful way,” he said.
We are quickening the full opening of market access for foreign investors in banking, securities and insurance sectors.
Li said China will also announce policies to help foreign investors to invest in and trade China’s bonds, just before Chinese bonds’ inclusion in the Bloomberg Barclays Global Aggregate Index, one of the most widely tracked in the world, scheduled to start on Monday.
China has eased foreign access to its US$ 13 trillion bond market in recent years, especially through the Hong Kong- based Bond Connect scheme.
But global investors’ access to hedging instruments continues to be restrictive, and further clarification on tax collection policy is needed, ASIFMA, a financial industry lobby, noted in a report earlier last week.
Li added China will also issue ‘more favourable’ rules for foreign acquisitions of Chinese listed firms.
Beijing is drafting rules related to a new foreign investment law that was passed earlier this month.
The rules are expected to be completed this year.
Beijing will revise and shorten a ‘ negative’list of areas with restrictions on foreign investment, and will publish it before the end of June, Li said.
In the same speech, Li also sought to ease investors’ concerns over China’s cooling economy, saying Beijing has enough policy tools to fight a ‘hard battle’.
Li said China will cut “real interest rate levels” and lower financing costs for Chinese companies, but did not elaborate on which interest rate he was referring to.
Li had made similar comments in a speech earlier this month.
Some analysts say shockingly weak industrial profit data on Wednesday have added urgency for more policy easing.
China’s industrial firms posted their worst slump in profits since late 2011 in the first two months of this year as slowing demand at home and abroad took a heavier toll on businesses.
Analysts at Capital Economics said they believe the benchmark lending rate will be cut in the weeks ahead, though sources have told Reuters such a move may be a last resort if the economy does not show signs of responding to previous support measures. — Reuters
Li Keqiang, Chinese Premier