China's financial sector is well positioned to open wider to the outside world. On the one hand, China's banking and insurance systems have a strong comprehensive strength. Nine Chinese Banks and seven insurance companies made the latest fortune 500 list. On the other hand, China's right to make and speak international financial rules is also increasing. Not surprisingly, when Hong Kong stock exchange (hkex) made a takeover proposal to lse some time ago, lse responded by courting the Shanghai stock exchange. In recent years, China and the UK have launched a succession of financial innovations. China's financial sector is accelerating the implementation of market access, capital access and institutional access in an orderly manner.
Previously, when they first came to China, the untapped land was sold in a relatively small market, so they viewed China as a "production and processing" part of their supply chain, exporting the finished products to other countries for sale. Today, China has become the most important part of the global business of multinational companies. The opening up of China's financial sector began when Beijing joined the world trade organization in 2001 with a pledge to gradually open its market within five years. However, foreign investment in China has stepped out of a parabola of high opening and low moving, and poured into China, then fell silent, participation is not high. Anz transferred a 20 per cent stake in Shanghai rural commercial bank to cosco and baoshan steel in previous years, while citigroup transferred a 20 per cent stake in guangdong development bank to China life.
In fact, openness is a kind of game. The industry and the public are also concerned about the potential risks of financial openness. After all, financial stability is extremely important to the stability of the country and the sustainable development of the economy. This round of financial opening, to a large extent, is also an inherent requirement of China's economic transformation. It is very beneficial for Chinese enterprises to improve their operating capacity and productivity. It can be said that every previous industrial explosion and technological progress in China was the result of openness.
In terms of accelerating the opening up of the financial sector, the guideline clearly states that restrictions on the business scope of foreign Banks, securities companies, fund management companies and other financial institutions operating in China will be lifted to enrich market supply and enhance market vitality. We will reduce quantitative access requirements for foreign investors to invest in establishing banking and insurance institutions and to carry out related businesses. We will abolish the total assets requirements for foreign Banks to establish foreign legal entities in China, and the length of operation and total assets requirements for foreign insurance brokerage companies to operate insurance brokerage businesses in China. We will expand the scope of shareholders who invest in foreign Banks and insurance institutions, abolish the requirement that the only or major shareholder of a sino-foreign joint venture bank in China must be a financial institution, and allow foreign insurance groups to invest in the establishment of insurance institutions. We will continue to support the handling of administrative licensing for the establishment and change of foreign-funded insurance companies and their branches in accordance with the principle of consistency between domestic and foreign investment. In 2020, we will abolish the restriction on foreign ownership of securities companies, securities investment fund management companies, futures companies and life insurance companies to be no more than 51%.
(Picture Source：Baidu&Sogou)
Recently, the state council issued "on further do a good job of utilization of foreign capital opinions" (hereinafter referred to as ")), from the deepening of opening to the outside world, strengthen the investment promotion, deepen the reform of the investment facilitation, and protecting the legal rights and interests of foreign-funded article four aspects proposed a total of 20 opinions. From closed to open, and now China, the global investment hot, facing the new opening requirements. Stability of foreign capital, has become an important issue to promote the development of Chinese economy high quality.
Opening up the financial sector is an important link in China's reform process. A more open financial market must be prepared for more external shocks, and the financial institutions that have grown up in China are already internationally competitive.
According to some data, by the end of 2017, the total assets of foreign Banks only accounted for 1.32% of the total assets of China's banking industry. Meanwhile, the total asset share and premium income market share of foreign insurance companies were respectively 6.71% and 5.85%, both at a low level. The lack of openness of the financial market has not significantly affected China's economic growth in the past. However, with the change of the economic situation, various mismatches between financial resources and the real economy have become increasingly prominent and become constraints for further growth. In early 2019, the central government proposed a new financial supply-side structural reform, targeting the financial sector.
Over the years, China has grown from a focus on its own development to an open economy that plays an important role in the global governance system. A strong financial system is one of the necessary pieces of the puzzle to achieve this goal. Financial openness means that China has become more confident and relaxed about its financial system.
In the process of China's economic development, the role of transnational corporations in China has also undergone fundamental changes.
