China sees wider financial openness and deeper reform
Gao Junqing, a Shanghai-based entrepreneur, still remembers his first experience knocking at the door of a foreign-funded bank around 20 years ago.
He wanted to seek advice on how to invest his money.
Two decades later, he has become an expert in investment. Reflecting on his investing experience, Gao applauded the rich variety of choices that are available to him now.
Gao is lucky, as China has been endeavoring to liberalize its financial sector over the last two decades.
Thanks to the century-long efforts, further progress has been made in the country's reform and opening-up to the world, said a communique of the sixth plenary session of the 19th CPC Central Committee.
The Party has consistently promoted broader and deeper reform across the board, with the financial sector an important part of the plan.
China's financial system has grown into a US$45 trillion industry that boasts the world's second-largest bond and stock markets and third-largest futures markets after undergoing a series of reforms to facilitate foreign investment.
"Opening-up is the hallmark of contemporary China," Xi told officials, business leaders, and entrepreneurs participating in this year's China International Import Expo (CIIE).
The year 2021 marks the 20th anniversary of China's accession to the World Trade Organization. After the entry, the country's efforts in internationalization have brought its development to a new stage and injected fresh energy into the world economy, Xi noted
Beijing has recently been making encouraging announcements regarding the opening of China's financial sector. Most notably, limits on foreign ownership of fund management, insurance, and securities firms have been lifted throughout 2020, one year ahead of schedule.
This is a positive development for many foreign firms who have visions of establishing or expanding their operations in China, as the likes of Goldman Sachs and BlackRock were previously only allowed to own 49 percent of their joint ventures.
This August, J.P. Morgan announced that the China Securities Regulatory Commission has approved the registration of J.P. Morgan International Finance Ltd taking 100 percent ownership of J.P. Morgan Securities (China) Company Ltd, making it the first foreign firm to fully own a securities venture in China.
BlackRock Inc, the world's largest asset manager, started this June operating its joint venture wealth management business in Shanghai.
With registered capital of 1 billion yuan (US$155.7 million), it was among the first foreign-controlled wealth management companies to obtain regulatory clearance to tap the country's growing wealth.
Ueda Yagi Money Broking (China) believes China's financial reform has brought golden opportunities to foreign investors.
The company, the country's first wholly foreign-owned money market broker, is entitled to operate its brokerage business in the foreign exchange, money and bond markets.
Liberalization has laid further groundwork for China's yuan internationalization, supported equity and bond market development, and loosened capital inflows and outflows, and enhanced global connectivity, said a report by EY.
Quotas for Qualified Foreign Institutional Investors (QFII) and RMB QFII investor schemes have also been scrapped.
The country's Securities Law has also been reformed to simplify foreign participation, and thanks to the Bond Connect and Stock Connect schemes, the main vehicle to invest in China, global players now have easier access to China's vast capital markets.
China has also been enticing foreign insurers. Germany's Allianz and France's AXA received approvals in November 2018 to expand their footprints here.
The greater foreign presence has helped drive inbound product innovation, expand business and consumer choices, and potentially reduce systemic financial risk, EY noted.
For instance, progressive foreign retail banks offer best-in-class products, mature practices, and advanced risk management and service capabilities.
To promote high standards of openness, China will further shorten the list of negatives for foreign investment and expand the availability of telecommunications, health care, and other services in an orderly fashion, according to President Xi.
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