China scraps foreign-stake limits in financial sector

China has removed limits on foreign holdings in domestic banks and asset management companies, in a significant step toward fulfilling its pledge to open its $40 trillion financial sector.

The move, which realizes a central reform Beijing pledged last year, gives foreign financial companies the same footing as local firms. Stakes were previously capped at 20% for a single foreign firm and at 25% for a group.

Chen Long, a Beijing-based economist at research firm Gavekal Dragonomics, told Bloomberg: “China is showing they are keeping their promise and that regulators are interested in opening up, rather than closing down. Given the ongoing trade dispute, from a reputation perspective, this is helpful.”

The lifting of caps is central to China’s efforts to further integrate into the global financial system. The move is one of a raft of initiatives that President Xi Jinping announced in November. These are mostly due to be implemented by the end of this year against a backdrop of an escalating trade war with an increasingly protectionist America.

Foreign banks held an estimated $420bn of assets in China at the end of 2016, yet this value marks the lowest share since 2003.

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ABOUT THE AUTHOR
Christopher Copper-Ind
Christopher Copper-Ind is Publisher and Editor of International Investment. His previous publishing experience focused largely on the Middle East and emerging markets, and he was Editorial Director of The Business Year, based in Istanbul, for three years before moving back to London in 2017. He is the author of How to Negotiate, to be published by Macmillan in 2019.

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