THE Chinese nation will accelerate the opening up of its banking sector to foreign investors and consider steps to increase the upper limit of shareholding in Chinese financial institutions by foreign banks.
The country’s top banking regulator said the market share of foreign banks in China by assets has declined during the last five years. This is not beneficial for promoting competition and structural optimization in the banking sector.
Chairman of the China Banking Regulatory Commission, Guo Shuqing said this during the 19th National Congress of the Communist Party of China.
According to the CBRC, by the end of 2016, the total assets of foreign banks in China had reached 2.93 trillion Yuan ($442.14 billion), accounting for 1.29 percent of the total assets of financial institutions in the Chinese banking sector, falling from 1.82 percent as of end-2012.
“We will give more space to foreign banks in the form of their establishment, the percentage of their shareholding (in Chinese financial institutions) and their scope of business,” Guo said.
Since December 2003, the CBRC has allowed a single offshore financial institution to own up to 20 percent of a Chinese financial institution. For multiple offshore financial institutions, if their total investments in an unlisted Chinese institution reach 25 percent and above, the FI is supervised in accordance with the regulations for foreign institutions.
But if their total investments in a listed Chinese institution hit 25 percent and above, then it is supervised by regulators as a Chinese financial institution, according to the CBRC. Prior to Guo’s remarks at the 19th CPC National Congress, the State Council issued a notice on Aug 16, stressing its decision to keep carrying forward the opening of China’s banking, securities and insurance industries to foreign investors, following a similar notice issued in January on relaxing market access restrictions for several types of foreign financial institutions.
Foreign banks welcomed the Chinese government’s decision to further open up its financial sector. In the opening of the 19th CPC National Congress, President Jinping noted that they will significantly ease market access, further open the service sector and protect the legitimate right and interest of foreign investors, saying all businesses registered in China will be treated equally.
“we will improve the balance in opening our different region and open the western region wider, we will grant more power to pilot free trade zones to conduct reform and explore the opening of free trade ports” he added.
He added that they will develop new ways of making outbound investments, promote international cooperation on production capacity, form globally –oriented network of trade, investment and financing, production and service and build up their strengths for international economic cooperation and competition.