BOAO, China (Reuters) – China set a clearer timetable on Wednesday to open its financial sector to more foreign investment by the end of 2018, as Beijing seeks to avoid mounting criticism from the United States and other trading partners that limit unfairly competition.
Governor of the Bank People's Party of China (PBOC) Yi Gang said that China will allow foreign firms to compete on equal terms with domestic companies in the financial sector, granting foreign banks greater commercial scope in the country.
Although the specific details offered were mostly incremental and repeated promises in the past, China for the first time said it would implement a series of measures by the end of this year, and promised some steps from June.
They include allowing foreign companies to invest in trust companies, financial leasing, auto financing and consumer finance, plans that were announced last year. The People's Bank of China also confirmed that it intends to launch a planned commercial link between its stock markets and London by the end of 2018.
Foreign companies and business partners in China have long complained about the lack of implementation of the reforms announced years before, and that external companies continue to face unofficial restrictions even after some sectors have apparently been opened.
China's official pledges, made at the annual Boao Forum for Asia in the southern province of Hainan, echoed Beijing's previous pledges to open up the financial sector, but it comes at a time of greater pressure on China by China on trade and access to mass markets.
China will raise foreign ownership limits to 51 percent in securities, fund management, futures and life insurance companies "in the coming months," the PBOC said on its website. The current property limit for securities, futures and fund management companies is 49 percent and the limit for insurance companies is 50 percent.
The gradual elimination of these limits was first announced in November, when an official said that the measure would take effect immediately after the drafting of the related regulations.
President Xi Jinping pledged on Tuesday to open up the economy further and reduce import tariffs on products such as automobiles, in a speech seen as an attempt to defuse the increasingly bitter trade dispute with the United States and possibly open up the path to the start of negotiations after both sides threatened eye-for-eye tariffs.
"The greater detail about the timing of the implementation may indicate China's desire to avoid an escalation of trade restrictions and increase market confidence that announced measures to open the market will be adopted in practice," he said. the credit rating agency Moody & # 39; s. a note on Wednesday.
The government will also not establish foreign ownership limits for investment in wealth management companies established by commercial banks by the end of 2018, the PBOC said.
While China's stock exchanges rose after Yi's promise to further open the financial sector to foreign investors, there are still reasons to be skeptical that big changes will soon take place.
China has repeatedly pledged to open up sectors such as financial services, including promises made last year to the Trump administration that it would grant "full and quick market access" to US payment network operators. UU
But despite a 2012 WTO decision that China discriminated against foreign payment card companies, no US company has yet been licensed.
"China often promises a lot, but because of politics or internal political opposition, many of these reforms in foreign investment are slow to take effect," said Andrew Collier, CEO of Orient Capital Research in Hong Kong.
"We will not know how far this will go until we see if there are non-tariff barriers and how many (Chinese) companies are really willing to sell themselves to foreign investors."
Despite some gradual opening of China's financial sector in recent years, foreign companies still represent only a small fraction of the market, and the new measures are unlikely to lead to significant changes, as large companies with state investment, they have a dominant presence in these businesses.
China also said on Wednesday it would quadruple the daily quota for the connection schemes of shares that connect the markets of Hong Kong and mainland China, although the impact is expected to be limited since investors only use a small fraction of the daily fees under the current limit.
INSURANCE SECTOR MEASURES
China also said it was accelerating a plan originally announced in November to lift the foreign ownership restriction on life insurance companies, following Xi's commitment the previous day to accelerate the opening of the insurance sector.
China will raise the property limit to 51 percent in a few months and completely eliminate the restriction in three years. In November, China said it would raise the limit to 51 percent in three years and eliminate it completely after five years.
The government will also eliminate the requirement that foreign insurers
must have a representative office in China for two years before they can establish a company, further facilitating foreigners' access to the insurance sector.
While stock indexes rose overall, several of China's largest insurance companies fell on the news that foreign competition could rise. China Life Insurance Co Ltd ( 601628.SS ) ( 2628.HK ) Down 0.8 percent, Ping An Insurance Group ( 2318.HK ) ( 601318.SS ) had fallen by almost 1 percent and life in New China ( 601336.SS ) had fallen by 1.8 percent.
On trade, Yi said that China and the United States should treat their problems in a rational way and that China-United States. Trade in goods and services should be balanced in the future.
Kevin Yao report; additional reports from Shu Zhang; Written by John Ruwitch and Elias Glenn; Edition of Sam Holmes and Kim Coghill