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China steady in opening up finance industry

2018-02-28设置

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With fewer restrictions, foreign banks have started to play a bigger role in China’s financial markets.

FOLLOWING eased controls on foreign-owned shares in financial  institutions last year, China has forged ahead with opening up its  finance industry with measures to expand the scope of business and  market access for foreign banks.

The China Banking Regulatory  Commission published policies over the weekend for overseas lenders to  invest in domestic banks, establish new branches, and follow the same  standards as domestic players. The move reflects China’s commitment to  opening up, said Ding Jianping of Shanghai University of Finance and  Economics.

“It means foreign-funded banks will gradually enjoy  ‘national treatment,’ and both domestic and foreign banks will compete  on a level ground,” Ding said.

Since its accession to the World  Trade Organization in 2001, China has gradually relaxed restrictions in  more areas, including underwriting treasury bonds, financial advisory  services, and most custodian business.

HSBC Qianhai Securities,  the first brokerage majority-owned by a foreign bank, opened for  business in December, with licenses to conduct research and brokerage  services, underwrite and sponsor stock and debt issuance, and advise on  mergers and acquisitions.

The joint venture has benefited from  steady, sustained efforts from the government to push forward economic  restructuring, deepen financial reforms, and build multi-level,  transparent and open capital markets, said Anthony Leung, vice president  of HSBC China.

The CBRC also cut red tape for foreign banks,  scrapping approval procedures for four items including overseas wealth  management products and portfolio investment funds. Banks only need to  report their services to authorities rather than obtaining approval in  advance.

The measures will not only help banks increase their  presence in China but are a boon to many other foreign businesses,  analysts said. “Foreign bank clients engaged in trading and investment  in China are expected to receive better financial services as control  loosens, which will further promote economic ties between China and the  rest of the world,” said Ding.

With fewer restrictions, foreign  banks have started to play a bigger role in China’s financial markets.  In the financial hub of Shanghai, the total assets of foreign banks  reached 1.56 trillion yuan (US$250 billion) by the end of last year, an  increase of 13 percent year on year, the quickest pace in nearly five  years. They accounted for around 10 percent of total banking assets in  the city.

More favorable policies are in the pipeline.

Vice  Finance Minister Zhu Guangyao said in November the country will remove  restrictions on investment in Chinese banks, financial asset management  companies and life insurers in three to five years, as well as in joint  ventures in securities, funds or futures.

The CBRC said it will  continue to support foreign banks to enter the Chinese market,  broadening the scope of their business and building a fair and  transparent policy environment.

Those measures will give foreign  capital greater say in business operations and motivate them to channel  more resources, said Fu Yang, an analyst at AVIC Securities. Christine  Lam, Citigroup’s chief executive for China, expects the country’s clear  roadmap and timetable in opening up will help foreign-funded financial  institutions make preparations to integrate into the market, including  possible cooperation with domestic firms and licensing.

Foreign  players will see wider market access and more opportunities to increase  their presence as China continues to liberalize the capital account and  relieve tax burdens for businesses, Lam said.

Analysts expect the  continued opening to inject new vitality into the country’s financial  sector and speed up Chinese banks’ global push, even though there will  be more competition.


(From SHINE)