Date
22 October 2019
China is moving forward the schedule for ending foreign ownership limits in the financial sector, Premier Li Keqiang said on Tuesday. File photo: Reuters
China is moving forward the schedule for ending foreign ownership limits in the financial sector, Premier Li Keqiang said on Tuesday. File photo: Reuters

China to scrap ownership limits in financial sector in 2020

China will end ownership limits for foreign investors in its financial sector in 2020, a year earlier than scheduled, Premier Li Keqiang said on Tuesday.

“We will achieve the goal of abolishing ownership limits in securities, futures, life insurance for foreign investors by 2020, a year earlier than the original schedule of 2021,” Li told the World Economic Forum in Dalian, Reuters reports.

China is moving forward the schedule to show the world that it will not stop opening up its financial sector, Li said, adding the government will also reduce restrictions next year on market access for foreign investors in the value-added telecoms services and transport sectors.

China will also further open its manufacturing sector, including the auto industry, while reducing its negative investment list that restricts foreign investment in some areas, Li was quoted as saying at the so-called Summer Davos event.

Beijing’s signal that it is quickening the pace of opening up came after the presidents of China and the United States agreed over the weekend to restart trade talks in another attempt to strike a deal and end a bruising tariff war, Reuters noted.

On Sunday, China cut the number of sectors subject to foreign investment restrictions, a widely expected move, to 40 from 48 in the previous version, published in June last year.

In other comments, the Chinese premier warned about rising global economic risks. 

“Currently, global economic risks are rising somewhat, international investment and trade growth is slowing, protectionism is rising and unstable and uncertain factors are increasing,” Li said.

“We should actively cope with this. Some countries have taken measures including cutting interest rates, or sent clear signals on quantitative easing.”

But China will not resort to competitive currency devaluation, and will keep the yuan exchange rate basically stable at a reasonable and balanced level, the premier said.

The People’s Bank of China has slashed the amount of cash banks must hold as reserve six times since early 2018 to help turn around soft credit growth, and more cuts in banks’ reserve requirement ratios (RRRs) are widely expected in coming months.

China has also injected large amounts of liquidity into the financial system and guided short-term interest rates lower, while ramping up infrastructure spending and cutting taxes.

“We will adopt targeted RRR cuts, RRR cuts, reductions in real interest rates – mainly real interest rates for small firms whose financing situation will show significant improvements this year and funding costs will show significant declines,” the Chinese premier said on Tuesday.

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