CHINA is opening its doors wider to foreign financial companies as it marks the 40th anniversary of reform policies that have integrated the country into global commerce.

The country’s financial sector now ranks second in the world, with US$33 trillion in assets. Its commitment to global trade will be underscored by the six-day China International Import Expo that starts tomorrow in Shanghai.

Following President Xi Jinping’s declaration of broadening access to the world’s second-largest economy, Yi Gang, governor of the People’s Bank of China, announced at this year’s Boao Forum for Asia annual conference that foreign investors will find it easier to do business in China in the future.

Specifically, a cap on overseas investment in Chinese banks will be removed, and foreign investors will be allowed to own 51 percent stakes in securities firms, fund managers and life insurance providers.

China is encouraging overseas investors to enter sectors such as trusts, financial leasing, auto finance, money brokerage and consumer finance. Financial asset investment and wealth-management companies created by commercial banks will have no limit on foreign ownership.

All these measures have been welcomed by market players. Australia & New Zealand Bank (China)’s research team said in a note that Yi’s speech confirms China’s reform commitment and provides a detailed roadmap to boost China’s further integration into global financial markets.

Big Western banks also lauded the policy change. Recently, the China Securities Regulatory Commission accepted J.P. Morgan’s application to establish a fully integrated securities company in which it will hold a 51 percent stake.  The bank said it will increase its stake to 100 percent when regulators allow it.

Mark Leung, the chief executive officer of J.P. Morgan China, said his firm “strongly believes in the future prospects of China.” He pointed to new opportunities created by economic and financial market reforms, the Belt and Road Initiative, rapid development of the new economy sectors and yuan internationalization.

At the end of June, China was home to 41 foreign-funded lenders, 115 branches of overseas banks and 156 representative offices. The combined assets of foreign banks here rose 7.5 percent in a year.

The assets of foreign players accounted for 10.2 percent of the entire local banking sector, according to the Shanghai bureau of the China Banking Regulatory Commission.

The Lujiazui financial area, which is part of the China (Shanghai) Free Trade Zone, has widened the opening of Shanghai’s services sector, local authorities said.

This year, Lujiazui is implementing the central government’s strategic plan to attract more foreign financial institutions to form a cluster in the area, according to Guo Zhiying, deputy director general of the Shanghai Lujiazui Financial City Authority.

A global asset management ecosystem is beginning to take shape, with nine of the world’s top 10 asset managers opening offices there and 39 internationally-renowned asset management companies setting up 57 wholly foreign-owned firms, the official added.

Shanghai, the commercial and financial hub of China, has always been a bridgehead in reform and deregulation. This July, the city government introduced 100 measures to attract more foreign investment to key industries such as smart manufacturing, finance and automobiles.

Li Qiang, Party secretary of Shanghai, pledged at the 2018 Lujiazui Forum that the progress not only reflects national strategy but also Shanghai’s ambition to turn itself into a global financial center.

The need for an international financial hub in China has never been more important than it is today, Li noted.

To reach its goals by 2020, Li said Shanghai will speed up efforts to build a global service system for yuan’s internationalization and a new platform for financial reform and innovation. It will make the best use of the free trade zone, encourage domestic and foreign financial institutions to become involved in the Belt and Road Initiative and explore further financial reforms such as convertibility of the capital account.

Li said Shanghai will attach more importance to the creation of a financial legal system to protect investors’ legitimate rights. It will also seek to attract more professional offshore talent by resolving practical problems associated with matters such as household registration, education and medical services.

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