China banks open up
Foreigners will be allowed to own Chinese financial institutions. Michael Smith reports.
Foreign banks and financial services firms will be able to take majority stakes in Chinese banks, asset management firms and funds under long-awaited plans by Beijing to open up the country’s financial institutions to offshore investors.
China’s new central bank governor Yi Gang announced the move on Wednesday, confirming Beijing is serious about moving swiftly on President Xi Jinping’s commitment a day earlier to open up the country to more foreign investment.
Yi used a panel discussion on monetary policy on China’s Hainan Island to announce the accelerated timetable for the plans, which will allow foreign companies to eventually take full ownership of Chinese banks and financial asset management companies.
AMP chief executive Craig Meller, who was sitting on the panel, said it was ‘‘good news’’. However, the big Australian banks are not expected to rush into China.
Mark Whelan, ANZ Banking Group’s head of institutional banking, indicated last week that the bank was unlikely to inject more capital into China when it was in the process of exiting minority stakes acquired as part of the bank’s Asian expansion plan before the global financial crisis.
It was the first time China has provided a timetable for plans to open up its financial markets proposed at the Communist Party Congress in October last year.
The lack of detail had left many investors skeptical about the move.
Yi, who became governor of the People’s Bank of China (PBOC) last month, said foreign investors would be able to invest in trusts, financial leasing, auto finance and consumer finance by the end of the year.
There would be no ownership limits on foreign banks which set up new wealth management companies in China by the end of 2018.
Foreign banks would also be able to set up branches in China and would be treated equally with local companies, he said.
The cap on foreign investors’ shareholding in securities companies, fund management firms, futures firms and personal insurers would be increased to 51 per cent in ‘‘several months’’. The cap would be removed entirely in three years.
The current requirement for foreign investors to have at least one Chinese securities company as a domestic shareholder would be removed.
Foreign investors would also be allowed to run insurance broking and insurance assessment businesses in China under the changes, he said.
China would also launch measures by the end of the year to encourage foreign investment in trust financial leasing, automobile finance, currency broking and consumer finance.
Yi also said China would not devalue its currency to cope with trade tension with the United States. The measures back up Xi’s commitment a day earlier to move on opening up the country’s financial institutions as early as this year.
Yi also announced plans to give Chinese investors access to UK stocks, and a four-fold increase in the value of stocks that can be
''AMP said the move was 'good news'. However, the big Australian banks are not expected to rush into China.''
traded on existing sharemarket links between Shanghai and Hong Kong each day from May this year.
The daily quota on the Shanghai-Hong Kong Link and Shenzhen Hong Kong Link would be adjusted to 52 billion yuan a day (NZ$11.21b) from 13 billion yuan currently.
The Hong Kong-domestic link daily quota would be increased to 42 billion yuan from 10.5 billion currently.
Meanwhile, Chinese soya bean growers are cheering a proposed 25 per cent Chinese tariff on US soybeans.
China, the largest buyer of American soybeans in the world, has threatened to slap on the tariff as part of an escalating trade dispute with the US.
It followed President Donald Trump’s plans to impose tariffs on US$50 billion (NZ$67.8b) of Chinese imports.
China quickly matched the American tariffs, targeting products it can get elsewhere like
soybeans and small aircraft.
If enacted, the tariffs could raise food prices for Chinese consumers, but tofu producers, soymilk makers, and soybean importers at a trade exhibition in Shanghai expressed little concern about the potential tariffs.
``This problem is actually an opportunity,’’ said Wu Yuefang, Vice President of the Bean Products Committee of China.
``When the price of soybeans goes up, farmers are more willing to plant them.’’
US farmers could lose up to 70 per cent of their Chinese export volume, according to the the US Soybean Export Council.
- AFR/AP