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News: China commits to further open up its financial industries
On November 7, 2019, the Chinese State Council, the highest level of China’s administrative regulator, issued the Opinions on Further Promoting the Facilitation of Foreign Investment
(the Opinions). The Opinions outline the recent regulatory development and the next step actions to further open up the Chinese market to foreign investors. Highlighted below are a few key commitments which may be of interest to international financial institutional investors:
- Restrictions on the scope of businesses of foreign-invested banks, foreign-invested securities companies and foreign-invested fund management companies are to be removed;
- Quantity limitation in respect of foreign investment into banking and insurance sectors will be lifted;
- Total assets requirements for foreign financial institutional investors to set up foreign-invested banks (USD10 billion) and foreign bank branches (USD20 billion) will both be removed;
- The operation track record and total assets requirements for foreign insurance brokerage companies to operate brokerage businesses in China will be lifted;
- The major Chinese shareholder of a Sino-foreign joint venture bank will no longer be required to be a financial institution;
- Foreign insurance group will be allowed to invest into and set up insurance-type entities; and
- The maximum 51% ownership by foreign investors in the following sectors will be completely removed by 2020: securities companies, securities investment fund management companies, futures companies and life insurance companies.
These groundbreaking commitments revealed China’s latest movement to fulfill its promise to open its financial industries further. Market participants should watch closely additional regulatory changes expected to come.