DALIAN: 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.
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 told the World Economic Forum in the northeastern Chinese port city of Dalian.
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.
But analysts doubt the ceasefire will lead to a sustained easing of tensions, and warn lingering uncertainty could dampen corporate spending and global growth.
“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 said.
Foreign investment banks such as Morgan Stanley are looking to join HSBC Holdings PLC, JPMorgan Chase & Co, Nomura Holdings Inc and UBS Group AG in owning controlling stakes in onshore securities joint ventures in China under liberalised rules announced in 2017.
“JPMorgan welcomes any decision made by the Chinese government that looks to liberalise its financial sector further,” said JPMorgan China CEO Mark Leung. “JPMorgan will continue to invest in China and strengthen the onshore platforms in order to better serve its clients.” Citigroup, which is in the process of setting up a majority-owned securities joint venture in China, also welcomed the move.
“Citi welcomes any move that leads to the further opening up of the Chinese financial system,” said James Griffiths, a Hong Kong-based spokesman for the bank.
In recent months, China has allowed many foreign financial firms to either set up new businesses onshore or expand their presence through majority ownership in domestic joint ventures across mutual funds, insurance and brokerage businesses.
Sources with direct knowledge of the matter previously said that Morgan Stanley is likely to get regulatory approval for owning a majority stake in the second half of this year.
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.
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.
On Saturday, leaders of the Group of 20 major economies warned of growing risks to the global economy but stopped short of denouncing protectionism, calling instead for a free and fair trade environment after talks some members described as difficult.
Echoing the sentiment, Li said protectionism is rising, but did not make references to specific economies.
“In the face of pressure from a slowing global economy, I believe people are all in the same boat. We should promote the spirit of partnership, carry out equal consultations, seek common ground while reserving differences and manage and control disputes,” Li said.
The US-China trade war has hit business confidence worldwide, disrupted supply chains and shaken financial markets, adding to worries about a global economic slowdown.
Fallout from the dispute is spreading. Business surveys this week showed factory activity shrank in China and much of the rest of Asia in June, as well as in Europe, while manufacturing growth cooled in the United States, keeping pressure on policymakers to shore up growth.
Rising worries over global growth have compelled some central banks, such as those in Australia, New Zealand, India and Russia to cut interest rates. — Reuters
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