The banking and insurance regulator in China issued changes to existing rules on Thursday (August 23) that will enable more foreign investments in the financial industry of the country.
Reuters, citing changes published, reported the new rules would enable 51 percent ownership of brokerage firms and life insurance companies. The cap would be eliminated in 2021. Other financial industries’ ownership restrictions will also be eased, noted the report. The move is expected to prompt a flow of investments into the Chinese financial sectors. In April the government of China offered up a more clear schedule for opening up its financial sector to increased investments from foreigners, saying it will happen by the end of 2018. Reuters, citing People’s Bank of China (PBOC) Governor Yi Gang, said that under the efforts, foreign firms will be able to compete against local companies on equal footing. What’s more, Chinese-based companies in the financial sector will give foreign banks more business within the country.
In late March of this year, speaking at the annual session of the China Development Forum (CDF) at the Diaoyutai State Guesthouse in Beijing, Gang said that opening up the financial sector will result in progress, while keeping it closed would not. “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),” Gang said. During the wide-reaching speech, he placed a lot of emphasis on controlling risk, which has been the message coming from the Chinese government 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,” Gang said. “The opening up of the financial sector must be accompanied by the development of financial regulation.”