China’s Banking and Insurance Regulator Readies New Round of Opening Measures

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The China Banking and Insurance Regulatory Commission (CBIRC) has flagged the research and preparation of a fresh round of measures to further open the Chinese financial system to foreign investment.

“CBIRC is currently in the midst of researching of a new round of opening measures,” said Wang Zhaoxing (王兆星), CBIRC vice-chair, at the China Development Forum (中国发展高层论坛) in Beijing on 23 March.

“We are currently researching the cancellation or loosening of certain quantitative restrictions and placing further emphasis on prudential standards and prudential conditions, [in order] to attract specialised and high-quality foreign invested banks and insurers to the Chinese market.”

According to Wang these opening measures will include:

  1. Further loosening of conditions for market entry;
  2. Further expansion of the business scopes for foreign-invested financial institutions based upon their business advantages and risk control capabilities;
  3. The provision of new areas for foreign-invested financial institutions to participate in innovation trials, and fully stimulating the market regulatory capability of foreign-invested banks and insurers;
  4. Further optimisation of regulatory provisions, continual improvement of the external operating environment, continual development of a more accommodating, targeted and effective regulatory system, and the operation of a more fair and open financial environment for the development of business in China by foreign-invested banks and insurance companies.

Wang said that the expansion of financial opening is both a challenge and a spur for Chinese regulators, and that CBIRC will seek to effectively balance the relationship between driving development and risk prevention during the process of opening by accelerating the establishment of independent legal systems, integration with general international regulatory standards, and the improvement of regulatory methods and tools.

“Opening does not at all necessitate the creation of financial risk or financial stability,” he said.

Wang also pointed to the need to ensure that China’s overall leverage levels are contained – including local government and overall debt; as well as prevent the impact of real estate bubbles upon the financial sector.

Beijing has accelerated efforts to open up the Chinese financial system since last year’s Bo’ao Forum with the launch of 15 new opening measures by CBIRC in 2018 alone, including the loosening or cancellation of foreign ownership restrictions and the loosening of entry conditions for foreign invested institutions.

According to Wang Zhaoxing China is currently host to 41 foreign invested bank legal persons, 115 foreign bank branches and 154 foreign bank representative offices, as well as 57 foreign invested legal person insurers, 14 foreign invested insurance intermediaries, and 136 insurance representative agencies.

China’s government work report for 2019 has also made mention of the need to “drive comprehensive external opening, further expand areas which are opened, optimise opening conditions, and use high-level opening to spur comprehensive deepening of reform.”

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