China’s financial opening-up picks up momentum

2017-11-20
english.gov.cn/People’s Daily

China’s financial sector has been continuing its opening-up, with all its foreign trades, investments, and reserves standing firmly among the top in the world, People’s Daily reported on Nov 20.

According to an official at the Ministry of Finance, China decided to raise the limits on direct and indirect foreign investment to 51 percent in the futures, securities, and funds sectors. Additionally, the cap will be lifted after three years.

China’s persistence in jointly facilitating the opening-up in its financial sector, improving the exchange rate forming mechanism for RMB, and loosening regulations on capital circulation laid a solid financial foundation for China’s economic growth, said Zhu Juan, director-general of the International Department at the People’s Bank of China.

Increasingly opening up institutions

The flourishing Chinese-funded financial institutions have steadily improved their level of international operations. Meanwhile, a growing number of foreign financial institutions further expanded the coverage of their services on a larger scale.

Against this positive backdrop, overseas insurance agencies headquartered in 16 nations and regions established 57 institutions in China. “The inbound overseas investment helped uphold a steady and thriving insurance market, and the introduction of foreign competitors further optimized market structure,” said an official at the China Insurance Regulatory Commission.

Less regulation on capital circulation

China’s capital account liberalization reform has seen many accomplishments. By the end of 2016, 37 out of 40 capital and financial account transactions were completed, covering convertible, basically convertible, and partially convertible accounts, all of which represented 92.5 percent of the total.

These reforms advanced the free flow of capital and vitalized the market. The bond market saw ever-expanding overseas issuing bodies and investment subjects; the stock market witnessed the successful launch and operation of Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, a continuing improvement in the systems of Qualified Foreign Institutional Investors (QFII) and RMB Qualified Foreign Institutional Investors (RQFII).

Renminbi has a bigger say

Renminbi has made an official entry into the reserve basket of Special Drawing Rights (SDR) of the International Monetary Fund (IMF), introducing its new identity as an international reserve currency. This momentous event led China’s economy into the global financial system, marking a milestone for IMF as well as the global economy, said Markus Rodlauer, the IMF’s mission chief for China.