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July 22, 2019

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Restrictions lifted on finance sector

CHINA lifted some restrictions on foreign investment in the financial sector on Saturday, as the world’s second-largest economy further opens up its economy to foreign business participation.

China will remove shareholding limits on foreign ownership of securities, insurance and fund management firms in 2020, one year earlier than originally planned, the Financial Stability and Development Committee said in a statement posted by the central bank on its website on Saturday.

Foreign investors will also be encouraged to set up wealth management firms, currency brokerages and pension management companies, the statement said.

Additional measures include scrapping entry barriers for foreign insurance companies, such as a requirement of 30 years of business operations, and canceling a 25 percent equity cap on foreign ownership of insurance asset management firms.

Foreign-owned credit-rating agencies will also be allowed to evaluate a greater number of bond and debt types, the statement said.

China’s financial stability commission said it was operating on the principle of “sooner rather than later” when it comes to relaxing restrictions on foreign institutions.

Financial reform

The People’s Bank of China also said that it would even let more qualified foreign-invested rating institutions develop credit-rating businesses for the interbank market and exchange-traded bonds, and allow them to receive Type A lead underwriting permits.

The financial stability commission, chaired by Vice Premier Liu He, convened on Friday to discuss the course of financial reform in the first half of the year.

“At present and in the next period, international and domestic trends are complex and there are many risks and challenges to the stable operations of the domestic economy and financial system,” it said.

Policymakers focused on tackling financial risk and financial contagion, and pledged new steps to support growth, according to a State Council statement.

It promised to continue to implement a sound monetary policy and carry out countercyclical adjustments in order to maintain sufficient liquidity in the market.

In November, China made an exception for two European insurers, allowing Germany’s Allianz to launch a 100 percent foreign-owned subsidiary, and France’s Axa to take control of its joint venture.

In December, China’s securities regulator authorized Swiss bank UBS to take a controlling stake in its local business.


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