China to Scrap Foreign Ownership Caps on Financial Firms a Year Early
*Premier Li Keqiang said China will abolish limits on foreign ownership of securities, futures and life insurance firms in 2020, one year ahead of schedule
*At present, the limit of foreign ownership in these entities is set at 51%
(Dalian) — China will abolish caps on foreign ownership of securities, futures and life insurance firms in 2020, one year earlier than planned, Premier Li Keqiang said Tuesday.
The move shows that China is accelerating the pace of opening its financial sector to foreign investors, Li said at the opening session of the World Economic Forum’s Annual Meeting of the New Champions, also known as Summer Davos, in Northeast China’s port city of Dalian.
Currently, China limits foreign ownership of any domestic securities, futures or life insurance firm to 51%, according to last year’s negative list (link in Chinese) for foreign investment. The list was enacted in July 2018 by the Ministry of Commerce and the National Development and Reform Commission, the nation’s top economic planner.
The negative list, as well as this year’s updated version (link in Chinese) which was released on Sunday, both said China would scrap the 51% cap in 2021.
The Chinese government has long set restrictions for foreign investors’ shareholdings in financial firms, which analysts say aims to protect the country’s comparatively young financial industry. Yet such limits have led foreign companies to complain of an unfair playing field in the country. In November 2017, Beijing promised to loosen the restrictions during U.S. President Donald Trump’s visit to China.
In 2018, China abolished the cap on foreign ownership of Chinese banks, raised the ceiling on foreign shareholdings in securities or futures firms to 51% from 49%, and lifted the cap on foreign holdings in life insurance firms to 51%, from 50%, according to last year’s negative list. A statement (link in Chinese) accompanying the list’s release in June 2018 said all caps on foreign holdings in financial firms would be removed in 2021.
Since November, several global financial giants have won approval to take controlling stakes in existing or new brokerages on the Chinese mainland, including Switzerland’s UBS Group AG, U.S.-based JPMorgan Chase & Co. and Japan’s Nomura Holdings Inc.
Contact reporter Lin Jinbing (firstname.lastname@example.org)
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