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Characteristics and Impact of China's New Round of Financial Opening

On top of steps China’s regulators took in the past years to level the playing field between overseas and local firms, China has unveiled 12 new measures to further open up its banking and insurance sectors, announcing plans to remove limits on ownership in local financial institutions and scrap size requirements for foreign firms that operate onshore. This not only stimulates the enthusiasm of foreign financial institutions to participate in China's financial opening up but also helps bring foreign expertise and experience to domestic market, which helps promote China’s financial supply side reform.

Characteristics of China's New Round of Financial Opening

With three major characteristics listed below, the 12 new measures show that China's opening-up policy has shifted from earlier elimination of ceiling on foreign ownership in domestic financial institutions to the relaxation of size requirements and business limitation.

1. Removing the restrictions on the total assets of foreign-funded institutions could attract smaller and niche players

2. Scrapping the ownership limits in Chinese commercial banks facilitates local bank acquisitions

3. The principle of equal national treatment for foreign and domestic investment is emphasized

 

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Content provided by Bank of China (Hong Kong)
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