Circular of the State Council on Several Measures concerning the Expansion of Opening-up and the Active Use of Foreign Capital issued by the State Council on January 17, 2017 requests that "the service industry should focus on easing restrictions on foreign investment in banking financial institutions, securities companies, securities investment fund management companies, futures companies, insurance institutions, and insurance intermediary agencies, and liberalizing restrictions on foreign investment in areas such as accounting and auditing, architectural design, and rating services."
The 2018 Government Work Report pointed out that "China will orderly open the bank card clearing and other markets, lift restrictions on the business scope of foreign insurance brokers, and liberalize or cancel foreign investment ratio restrictions on banks, securities, fund management, futures, and financial asset management companies and unify the market access standards for foreign and domestic banks.” These vigorous measures indicate that the opening up of the Chinese financial industry is entering a brand new developmental period.
Below are the opening-up measures in the financial industry announced by the Governor of the Central Bank, Yi Gang, at the 2018 Boao Forum for Asia on April 11:
First, the restrictions on foreign investment ratio in banks and financial asset management companies should be eliminated. Both domestic and foreign investors will be treated equally. Foreign banks are allowed to set up branches and sub-banks in China at the same time.
Second, the upper limit of foreign shareholdings of securities companies, fund companies, futures companies, and personal insurance companies should be relaxed to 51 percent, and no restrictions will be imposed after three years.
Third, the requirement that “there should be at least one securities company among the domestic shareholders of the joint venture securities company” will be lifted.
Fourth, in order to further improve the interconnection mechanism, the daily quota for interconnection will be expanded by four times. The daily quota of Shanghai Stock Connect and Shenzhen Stock Connect will be 52 billion yuan, and the daily quota for the Hong Kong Stock Connect under the Shanghai-Hongkong Stock Connect and Shenzhen-Hongkong Stock Connect will be 42 billion yuan.
Fifth, eligible foreign institutional investors are allowed to run insurance agency business and insurance assessment business in China.
Sixth, the business scope of foreign insurance brokerage companies will be the same as that of Chinese-funded agencies.
Yi said that the above six measures will be implemented in the coming months. By June 30, 2018, most of these measures will have been implemented.
The following five measures will be released by the end of 2018:
First, foreign capital is encouraged to flow into China in the banking sector such as trusts, financial leasing, auto finance, currency brokerage, and consumer finance.
Second, there will be no restrictions on the proportion of foreign investment in newly established financial asset investment companies and wealth management companies established by commercial banks.
Third, the scope of business of foreign banks will be significantly enlarged.
Fourth, the business scope of the joint venture brokers will be the same as that of domestic brokers.
Fifth, the requirement that “an enterprise must have set up a representative office for two years before the establishment of a foreign-funded insurance company” will be completely eliminated.