China will provide foreign investors greater access to the country’s financial sector, The Wall Street Journal reports. Chinese vice finance minister Zhu Guangyo said China is moving to allow foreign companies to hold 51 percent of domestic-securities, fund-management and futures firms.
Zhu also noted that the 51 percent cap will be removed three years after the new rules take effect. China also removed caps for foreign investors’ stakes in Chinese banks. Under current rules, a single foreign investor can hold as much as a 20 percent stake in a Chinese bank and a group of foreign investors can own up to 25 percent in a single bank.
According to the Chinese vice minister, the government also will allow 51 percent foreign ownership in Chinese life-insurance companies in three years and lift all restrictions for foreign investment in the sector in five years.
Restrictions on foreign ownership in China’s financial industry have so far largely excluded foreigners from lucrative businesses such as trading in Chinese stocks and bonds and managing money for wealthy clients, The Journal notes.
In June, People’s Bank of China Governor Zhou Xiaochuan indicated that Beijing was working on plans to allow foreign firms greater access to the country’s financial sector, which is now dominated by state-owned companies. At the time Zhou noted that too much protection for domestic institutions would weaken the industry and lead to financial instability.
Last month, China’s top banking regulator, Guo Shuqing, said foreign banks’ market share in China was falling, which he said was bad for competition. The regulator also indicated that China would give overseas banks “more room” in equity ownership and business scope, The Journal adds.