context: Most types of financial sectors were removed from the negative list in 2020, but implementation particularly at the local level continues to plague foreign firms. Concerns over the US and EU banking crisis will likely slow improvements despite Beijing's rhetoric.
The next steps in Beijing's financial opening trends were discussed at the 18 March Global Wealth Management Forum's 2023 Annual Meeting, with comments from current and former officials:
- Cao Yu 曹宇 CBIRC (China Banking and Insurance Regulatory Commission) vice-chair explained regulators will
- look to benchmark against high-standard international economic and trade rules to further improve the institutional opening level of the PRC financial industry
- RCEP, which came into force last year, represents the highest level of PRC's commitment to opening the financial sector and has laid a good foundation for expanding institutional opening
- Beijing will then actively compare the rules of high-standard economic and trade agreements such as the Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP) and the Digital Economic Partnership Agreement (DEPA) to further improve the level of openness
- promote the integration of regulatory rules with international standards
- solvency rules for insurance companies were issued and capital management measures for commercial banks are being solicited for public opinion
- moving forward, Beijing will also explore green finance and digital finance
- better protect foreign and domestic capital by creating a fair market environment
- look to benchmark against high-standard international economic and trade rules to further improve the institutional opening level of the PRC financial industry
- Lou Jiwei 楼继伟 former Minister of Finance stated that opening the financial industry is an important part of China's opening to the outside world
- volatility of the international financial market has intensified and unconventional monetary and fiscal policies adopted by other countries during COVID have increased the leverage ratios of the government, households, firms, and financial institutions which has exacerbated inflation is creating spillover effects
- as central banks hike interest rates spillover effects such as bank failure will become more common
- moving forward, PRC regulators need to focus on the need to
- strengthen the connection with international rules and adopt global standards and best practices
- pay more attention to fairness and transparency
- attract high-level financial talent
- improve the rules for cross-border exchanges between parent and subsidiary companies of financial institutions
- allow foreign-funded institutions to conduct reasonable resource sharing on domestic and overseas platforms
- when conditions are ripe, allow foreign-funded financial institutions to publicly list on domestic capital markets.
- volatility of the international financial market has intensified and unconventional monetary and fiscal policies adopted by other countries during COVID have increased the leverage ratios of the government, households, firms, and financial institutions which has exacerbated inflation is creating spillover effects