China will focus both on opening up its financial sector and preventing risks via regulation and oversight, said Yi Gang, the new governor of China’s Central Bank.
According to a report in Reuters, speaking during the annual session of China Development Forum (CDF) 2018 at the Diaoyutai State Guesthouse in Beijing, Yi said that opening up the financial sector will result in progress while keeping it closed won’t. “History has proved that areas that are more open are more competitive, and areas that are less open are less competitive and see risks accumulating (as a result),” Yi said in the speech, according to Reuters. The news service noted that during the wide-reaching speech, Yi placed a lot of emphasis on controlling risk, which has been the message coming from the government of China since it started to open up its financial sector to outside investors and players. “We will put equal emphasis on the opening up of the financial sector and prevention of financial risks,” Yi said. “The opening up of the financial sector must be accompanied by the development of financial regulation.”
China recently moved to make it easier for foreign companies to operate in the country, announcing it will raise the limit of equity ownership by a foreign investor or entity to 51 percent from 49 percent. It hasn’t said when that rule would be implemented, noted Reuters. It also plans to get rid of ownership limits in different areas of the financial industry after three years, reported Reuters. Yi noted that even if the ownership limits get raised or ultimately go away, that doesn’t mean there won’t be supervision of these foreign players. Both domestic firms and foreign ones will be treated the same, noted Yi. At the same time China is opening up the financial sector, it will open the bond market more as part of the second phase of its China International Payments System (CIPS). CIPS is a cross-border yuan settlement system that’s launching shortly. The system will enable global firms to settle payments with Chinese businesses quicker and more efficiently. It will replace a network of clearing banks that are located globally, noted Reuters. “We have three major tasks for the financial system. First, implement prudent monetary policy. Second, push forward financial reforms and opening up. Third, win the battle against financial risks,” Yi said, according to Reuters.