Financial sector opening-up to deepen

China committed to larger-scale, wider-ranging reform of vital industry, say officials and experts

China will further expand the highlevel opening-up of its financial sector and advance institutional openingup with regard to rules, regulations, management and standards, officials and financial experts said.

The country is implementing a larger-scale, wider-ranging and deeper-level opening-up of its financial sector, and will adopt a more proactive strategy, Lou Jiwei, head of the Global Asset Management Forum and former finance minister, said on March 18 at the 2023 GAMF annual conference in Beijing.

The Chinese government is prepared to respond to changes in the external environment for an extended period of time, and it will firmly deepen its resolve to open up the financial sector and steadily expand institutional opening-up, Lou said.

According to the former finance minister, China will ensure the steady implementation and refinement of its opening-up measures. During the process of policy implementation, it is necessary to further strengthen communication and exchanges with domestic and foreign market entities. It is also necessary to strengthen the connection with international rules and adopt global standards and best practices, he said.

In addition, China should improve the rules for cross-border transactions between financial institutions’ parent company and subsidiaries, allow foreign institutions to share resources reasonably on domestic and overseas platforms, and optimize the channels and ways for foreign investors’ participation in domestic financial markets, Lou said.

When the conditions are mature, the country should allow foreign financial institutions to go public in the domestic capital market, he added.

Cao Yu, vice-chairman of the China Banking and Insurance Regulatory

Commission, said the nation will set a benchmark against high-standard international economic and trade rules and further enhance the level of institutional opening-up of its financial industry.

The Regional Comprehensive Economic Partnership agreement took effect last year, laying a good foundation for expanding institutional opening-up, Cao said. China will proactively refer to and learn from the rules of high-standard economic and trade agreements, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Digital Economy Partnership Agreement, to further enhance the level of opening-up, he added.

In recent years, Cao said, China has actively aligned with new international financial regulatory rules and carried out capital regulatory reform in the banking and insurance sectors. In the future, the country will also explore and experiment in the areas of common concern such as climate change, green finance and the digital economy.

The increasingly deeper openingup of China’s financial markets has provided new opportunities for investors to manage their wealth and allocate their funds, said Xuan Changneng, deputy governor of the People’s Bank of China, the country’s central bank.

As of the end of last year, the balance of renminbi assets held by foreign entities in China hit 9.6 trillion yuan ($1.4 trillion), a 1.2-fold increase since 2017. Overseas entities have issued 630 billion yuan worth of panda bonds, which are RMB-denominated bonds sold by foreign issuers on the Chinese mainland.

This reflects the increasing international influence and attractiveness of China’s bond market, as well as the confidence of global investors in the nation’s long-term, stable economic development and continuous opening-up of its financial markets, Xuan said.

“The 20th National Congress of the Communist Party of China clearly stated the need to steadily expand institutional opening-up with regard to rules, regulations, management and standards. This is a deeper level of opening-up beyond the opening-up based on the flow of goods and factors of production,” he said.

Meanwhile, the Hong Kong Monetary Authority, or HKMA, said on March 17 that in 2023, it will continue to focus on asset quality in the financial sector amid ongoing challenges in the credit landscape.

At a press conference in Hong Kong on 2022 year-end review and the 2023 priorities for the banking sector, the HKMA said Hong Kong’s retail banks returned to growth in 2022, with pretax operating profit expanding 19.3 percent.

HKMA Deputy Chief Executive Arthur Yuen said the liquidity coverage ratio of Hong Kong’s banking system reached 162.3 percent, exceeding the 100 percent required level.