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The
move, announced by vice finance minister Zhu Guangyao, comes a
day after U.S. President Donald Trump reiterated calls for
better access to Chinese markets in meetings with Chinese
President Xi Jinping.
The changes include raising the limit on foreign ownership in
joint-venture firms involved in the futures, securities and
funds markets to 51 percent from the current 49 percent. They
will take effect immediately following the drafting of specific
related rules, Zhu told a news conference.
The foreign business community welcomed the news but urged
caution until it was clear how rules would be implemented.
"Financial services further opening definitely has been high on
our list," said Ken Jarrett, President of American Chamber of
Commerce in Shanghai.
"It’s a step in the right direction. We’ll have to see the
detailed rules. In China you always have to pay attention to the
fine print to see how quickly it moves, but to finally ease up
on the cap is something that is welcome."
A JPMorgan spokesperson said the firm "welcomes any decision
made by the Chinese government that looks to liberalize its
financial sector further."
The plan to ease ownership restrictions comes as Beijing faces
mounting pressure from Western governments and business lobbies
to remove investment barriers and onerous regulations that
restrict overseas companies' operations in its markets.
During his trip to Beijing this week, Trump said that trade
between the two nations was unfair, and called for greater
market access for U.S. companies.
"We really have to look at access, forced technology transfer,
and the theft of intellectual property, which just, by and of
itself, is costing the United States and its companies at least
$300 billion a year," Trump said.
"Both the United States and China will have a more prosperous
future if we can achieve a level economic playing field. Right
now, unfortunately, it is a very one-sided and unfair one."
China has been sluggish to give foreign players more access to
its financial sector, but has promised to quicken the pace as
foreign investment into the world's second-biggest economy
slows.
China has implemented strict capital controls to contain capital
outflows, while opening up new channels for foreign money to
come into the domestic markets, though foreign financial firms
are still small players in the financial sector.
Reuters reported on Tuesday that China planned to allow global
banks to take a stake of up to 51 percent in their onshore
securities ventures for the first time and tie up with local
non-financial firms.
TOO LITTLE TOO LATE?
Some industry watchers said the changes are too little too late.
"This looks good, but in reality it is pretty small and it is
too late," said Keith Pogson, head of the Asia financial
services team at EY.
"If you are an international investment bank, you will be there
for the sake of your global franchise and having it as part of
your network, not because you think you will make much money in
China."
Markets reacted positively to the news, with insurers and
futures-related firms rallying strongly.
New China Life Insurance <601336.SS> jumped nearly 6 percent
after the announcement, while Ping An Insurance <2318.HK>
<601318.SS> advanced more than 4 percent and China Pacific
Insurance Group <601601.SS> rose over 3 percent.
China will drop foreign ownership restrictions on local banks
and asset management companies, Zhu said, adding that the time
is right for the nation to step up the liberalization of its
financial sector.
Full foreign ownership of local firms involved in the futures,
securities and funds markets will not be permitted until after
three years, while full overseas ownership of insurance firms
will be allowed only after five years, Zhu said.
(Reporting by Kevin Yao and Stella Qiu; additional reporting by
John Ruwitch in Shanghai, Matthew Miller in Beijing and Jennifer
Hughes in Hong Kong; writing by Elias Glenn; Editing by Sam
Holmes & Shri Navaratnam)
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