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March 11, 2019

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Financial market reforms on schedule

CHINA has implemented most of the financial market reforms that were announced last year, central bank governor Yi Gang said.

“We believe the opening-up of China’s financial market is conducive to both China and the world,” Yi said.

He said the country will firmly advance the opening-up of the financial market in accordance with the schedule set at the annual conference of the Boao Forum for Asia last April.

A total of 11 financial opening-up policies were mentioned in the timetable, covering sectors including banking and insurance.

In November, China approved the application of a joint venture of American Express for setting up a bank card clearing and settlement institution, and allowed S&P Global Inc to enter its credit rating market in January.

Meanwhile, China will also push for wider opening-up of the bond market to overseas investors and create a sound market environment.

Over the past two years, China’s bond market has taken fast steps of opening-up, as the country improved policies to make it easier for overseas investors to issue panda bonds and invest in its bond market, said Pan Gongsheng, vice governor of the People’s Bank of China.

At present, overseas investors hold around 1.8 trillion yuan (US$268 billion) in China’s bond market, and the holdings rose nearly 600 billion yuan in 2018, Pan said.

However, bonds owned by them represent a little more than 2 percent of China’s total. “The ratio is not very high, and there is still huge potential in the future,” Pan said.

Overseas holdings rose significantly in the past two years, thanks partly to the Bond Connect program, a market access scheme launched in July 2017 that allows overseas investors to invest in the Chinese mainland’s interbank bond market using financial institutions on the mainland and in Hong Kong.

China announced in November 2018 that overseas institutions investing in its bond market would be exempted from corporate and value-added taxes on their bond interest earnings for a period of three years.


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