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.