Hailing this as a milestone to significant financial liberalization, BBVA, a Spanish Bank, has this to day in its research note of 13 November, 2017 -
"China has taken a major step toward the long-awaited opening of its financial market. On last Friday, unveiled at a government briefing during the US President Trump’s first visit to China, Vice Finance Minister Zhu Guangyao said China will remove foreign ownership limits on banks while allowing overseas firms to take majority stakes in local securities ventures, fund managers and life insurance companies. This move indicates that China will give global financial companies more access to the financial sector of the world’s second-largest economy.
In particular, the key points of the speech could be summarized as follows:
- Foreign firms will be allowed to own stakes of up to 51% in securities ventures; and China will drop foreign ownership limits for securities companies three years after the new rules are effective.
- China will lift the foreign ownership cap to 51% for life insurance companies after three years and remove the limit after five years.
- Limits on ownership of fund management companies will be raised to 51%, and will be removed in three years.
- China will also eliminate the 20% ceiling on ownership of a Chinese commercial bank or asset management companies by a single foreign investor and the 25% cap on total foreign ownership of such companies."
The research note surmises that initial focus is likely to be on increasing foreign presence in insurance companies, securities and fund management industries, rather than bank lending businesses, which remain dominated by the four largest state-owned banks.
Nevertheless, while the pudding remains to be tested, with more interest rate liberalization, there is likely to be greater progress towards the internationalization of the RMB and Chinese inbound and outbound investments.
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