More steps to boost financial sector opening-up

China is taking more steps in the coming months to further open its financial markets to overseas investors, despite disruptions from the COVID-19 epidemic and changes in the external environment, officials and experts said.

A senior official of the People's Bank of China, the central bank, said that changes in the international situation and impact of the COVID-19 pandemic have not disrupted the pace of financial sector opening-up. In fact, the process has accelerated since last year as financial regulators have released more than 50 measures to facilitate the opening-up.

"Foreign institutions showed greater interest in entering China's financial market, rather than withdrawing from here," said Liu Guoqiang, vice-governor of the PBOC. "Opening-up is not for pleasing others or making someone unhappy. It is the country's own choice," he said.

The official reiterated that the PBOC would implement all of the released measures as scheduled and look to improve the overall domestic business environment for foreign financial institutions so that they can enjoy the same opportunities as their Chinese peers.

Liu said that the PBOC would advance the internationalization of the renminbi and capital account convertibility in a proactive and sound manner.

Wang Xin, head of the research bureau of the PBOC, said at a forum last week that during the accelerated opening-up process, China will look to maintain financial stability and strengthen the coordination of monetary and fiscal policies.

Since last year, the PBOC has been rolling out and improving policies to further open up the financial market. The measures included removing the foreign ownership caps on life insurers, easing foreign ownership limits in securities, fund management and futures companies, and allowing overseas asset management institutions to jointly establish foreign-controlled asset management companies together with the subsidiaries of Chinese banks or insurers.

The authorities also announced measures that permit foreign-funded institutions to conduct credit ratings business on all types of bonds in the interbank and exchange bond markets, and to obtain "Type-A" lead underwriting licenses in the interbank bond market.

Besides, the financial regulators have also outlined plans to further facilitate overseas investment in the interbank bond market.

Currently, overseas investors are allowed to make investments in the bond market through various channels, including the qualified foreign institutional investor (QFII) and RQFII schemes, direct investment and the bond connect mechanism. It is necessary to integrate the policy requirements of the various channels and link the bond and fund accounts, financial regulators said.

Cheng Shi, chief economist at corporate financing platform ICBC International, said China's economy has changed from a high-speed growth model to a high-quality development period. Financial reforms and opening-up have been deepened, and it requires support from the real economy and small－and medium-sized enterprises to better serve the consumers.

Nomura Securities, the Tokyo-based brokerage, set up Nomura Orient International Securities, a majority-owned securities joint venture in Shanghai late last year. "The build-out so far has been encouraging," Toshiyasu Liyama, deputy president of Nomura Securities, said last week.

"Nomura has been building capabilities in China to take advantage of the financial sector reforms and the opening-up of the country's financial markets," said Liyama. "The initial focus is on institutional clients and wealth management for high-net-worth individuals in China, as well as to serve our long-standing corporate clients from Japan."

China has also removed the investment quota limits for QFII and RQFII, and allowed enterprises like American Express, MasterCard and Fitch Ratings to enter the domestic market.