Banking Regulator Flags Further Opening of Chinese Finance to Foreign Investment
The head of China’s banking regulator has reiterated the central government’s commitment to further liberalisation of the Chinese finance sector at the 19th National Party Congress held in Beijing.
Guo Shuqing, head of the the China Banking Regulatory Commission, said at the congress that the declining market share of foreign banks in China bodes poorly for competition, and that overseas lenders will be given “more room” when it comes to ownership and business scope.
Guo also indicated that regulators would pursue deeper reform of the banking sector in order to forestall systemic risk, as well as make greater effort to dispose of non-performing loans.
Earlier this year in June central bank governor Zhou Xiaochuan said at the Lujiazui forum that China’s finance sector needed to be further liberalised and opened up to foreign capital, in order to improve its efficiency and reduce risk.
“The experience of many countries including China itself clearly indicates that protectionism leads to sloth…[we] must firmly walk along the path of external reform. From the experience of opening up of the manufacturing and services sector we can deduce that the financial sector is no exception, and the similar application of competitive and opening principles will enable the financial sector to see even better development,” said Zhou.
Sources said to Bloomberg in September that that the Chinese central bank was working on a raft of proposals to further liberalise the banking and finance sector.
According to sources the proposals mooted by PBOC include allowing foreign parties to control domestic joint-ventures in the finance sector and provide yuan-denominated bank card clearing services, as well as loosening of the current 25% threshold on overseas ownership of Chinese banks.