China has unveiled the time frame for abolishing foreign ownership restrictions on futures, securities and fund management companies, amid worries that the US and China could grow further apart due to ongoing trade tensions.
China's Securities Regulatory Commission announced that limits on foreign investors in mainland-based futures firms would be scrapped on January 1 next year. Limits on mutual fund companies will be removed on April 1, while the caps on securities firms will be removed on December 1, 2020.
"CSRC will continue to implement China's opening-up measures, actively boost the opening up of China's capital markets and continue to approve the establishment and change of control of fund firms and securities firms, in line with law and regulations," the statement read.
Chinese regulators continue to move forward with constructive reforms to the domestic funds management landscape"
The regulator, however, did not specify whether this meant managers could submit an application for mutual fund licences starting in April or earlier, or whether the first such licence could be handed out as soon as April.
"Chinese regulators continue to move forward with constructive reforms to the domestic funds management landscape," a spokesperson for Invesco said in a statement. "This latest announcement enhances competition and enables all market players to bring compelling offerings to the Chinese market."
Last year, the commission began to allow some foreign financial entities to increase their minority stake to a majority 51%.
The announcement provides a definite timeframe for global asset managers that are already making preparations to enter China's retail fund trillion-dollar market.
Earlier this year, JPMorgan won a bid to acquire an additional 2% stake in its China JV, China International Fund Management (CIFM), from its JV partner Shanghai International Trust. The move offered JP Morgan a controlling stake in the JV. Credit Suisse also signed an agreement to take a majority interest in its China securities JV, while Morgan Stanley is reportedly said to be doing the same.
Beijing has been under pressure to open up its financial and securities markets since the trade conflict between China and the US started early last year.
One of the US complaints in trade tensions with China is that many Chinese industries are closed to foreign firms or dominated by state-owned entities, making it difficult for American companies to compete on even ground with their Chinese counterparts.
The CSRC was reluctant to raise the foreign ownership limit in the past decade as it wanted to give domestic players more time to expand their business scale and strengthen their financial muscle. Local securities and fund management companies have expressed fear that they would be easily edged out by giant foreign players if it granted them full access to the market.