Analysis | Is China set to fully open its financial borders to foreign institutions?
Reports suggest the Central Bank is locked in talks with domestic regulators and key domestic institutions over allowing foreign players not only more influence, but even allowing them to take majority stakes in JVs
China’s top bankers are believed to have been holding internal discussions for months on granting a bigger say in the running of the domestic financial industry to foreign institutions, ahead of the Party Congress next month, and the expected visit here of US president Donald Trump.
But just whether any such further opening up could manage to address the key concerns facing the sector, and reverse the slowdown of inward investment to China remains in question, according to industry insiders and market commentators.
No further details were disclosed on Tuesday, after Bloomberg reported the People’s Bank of China was locked in talks with domestic regulators and key domestic institutions over allowing foreign players not only more influence, but even allowing them to take majority stakes in joint ventures, as well as raising the current 25 per cent ceiling on foreign ownership of Chinese banks.
Overseas financial institutions are currently restricted to minority shareholders in joint ventures with banks, securities firms, and insurers in China, while major players in the US and Europe have been pushing China hard to open up its borders to more foreign players, with added influence.
HSBC became the first foreign bank to win permission for a majority-owned securities joint venture in China in June, after winning approval to invest 918 million yuan (US$135 million) for a 51 per cent stake in a venture in China’s pilot free trade zone Qianhai, just over the border from Hong Kong.