China plans to unveil 12 measures to further open up its financial markets. Chairman of the China Banking and Insurance Regulatory Commission (CBIRC) made the announcement, saying that many limitations will be removed this time.
The moves range from completely lifting ownership caps to scrapping asset requirements for foreign financial institutions. It impacts the banking sector, insurers, trust companies and consumer finance companies.
Equity caps in Chinese commercial banks will be lifted for both domestic and overseas banks.
The government is canceling several asset requirements, including the need for foreign banks to have 10 billion U.S. dollars in assets before setting up a legal entity in China or 20 billion U.S. dollars before starting a branch.
The government will also remove approval procedures for foreign banks to conduct business in Chinese yuan. And foreign insurance companies will no longer have to get 30 years of experience and 200 million U.S. dollars in assets to be able to conduct business in China.
Overseas financial institutions will be allowed to invest in foreign insurance companies in China.
Foreign insurers will be able to set up business branches here as well. Plus, foreign banks will be allowed to provide receipts and payment services for businesses in China.
Some rules are being eased for both Chinese and foreign investors. The government will no longer limit the number of Chinese shareholders in joint-venture banks. Foreign financial institutions and Chinese private holding banks will be encouraged to cooperate on banking and insurance businesses.
Data shows foreign banks only account for 1.6 percent of China’s banking sector, while 6.4 percent of the country’s insurance business belongs to overseas investors. To create more of a level playing field for foreign investors in the country’s financial sector, the government will also widen market access for both domestic and overseas consumer finance companies.
The financial authorities will treat all domestic and overseas entities equally, while cooperation and competition will be carried out subject to the same rule.