Why China for financial industry

In his keynote speech at the Boao Forum for Asia in March 2019, Premier Li Keqiang said China is more than determined to further open up its economy, including its financial market, in the new era, and provided a timeline for some specific measures to be adopted to improve the business environment to attract more foreign capital.

For all foreign financial institutions, China’s financial market is definitely appealing and its further opening-up could be one of the next major global trends, said experts in the financial industry.

According to the data published by the National Bureau of Statistics of China, in 2019, China’s financial industry generated an added value of 7707.7billion yuan ($1107.6 billion),  up 7.2 percent compared with the previous year, accounting for 7.8 percent of its GDP.

By the end of 2019, the total assets of China's financial institutions reached 318.69 trillion yuan, with year on year growth of 8.6 percent.

The benchmark Shanghai Composite Index gained 22.3 percent in 2019, its best annual performance since 2014. The Shenzhen Component Index also rallied 44.08 percent in the past year, the biggest annual gain in nearly 10 years.

Along with the booming is a series of policies announced in recent years to offer more opportunities for foreign capital in the financial sector.

The measures include revising regulations on foreign banks and allowing more participation of foreign institutions in credit rating business and the bond market.

The country will lift foreign ownership limits on securities, fund management and futures companies by 2020, a year ahead of schedule, said the State Council's Office of Financial Stability and Development Committee.

Tang Shengbo, head of China financials research at Nomura, said: “Foreign investors are now willing to invest in China's financial market, and the country is removing regulatory barriers to foreign investment. As the financial market is comprehensively opening up in many sectors including insurance, asset management and mutual funds, there is a lot to do for foreign investors in different business segments.”

Jin Keyu, an associate professor of economics at the London School of Economics, believes China's financial opening-up could be hugely significant for the world.

"It is one of the last liberalizations that China needs to do, and given the size of the country, it will be important for the world because China will be integrated, not just through trade, but also through capital flows," Jin said.