A leading Chinese politician has highlighted the limitations of China’s ongoing efforts to open up its financial sector to foreign participants.
Huang Qifan (黄奇帆), former mayor of Chongqing and vice-head of the China International Economic Exchange Center, said that China’s financial opening “still has bottlenecks,” pointing in particular to the low market share of foreign-invested financial institutions.
According to Huang foreign-invested financial institutions still account for only an “extremely low” 1.8% of China’s near 200 trillion yuan in financial assets. By contrast foreign-invested enterprises account for 30% of nearly 200 trillion yuan in industrial, commercial and industrial and commercial assets.
“These figures clearly indicate that the opening of China’s industrial and commercial sectors is quite thorough, and that the opening of the financial sector is ‘constrained’ and limited,” said Huang.
Huang made the remarks at the 18th China Enterprise Leadership Annual Conference (中国企业领袖年会) held in Beijing from 8 – 9 December.
“In general, there has been overall opening but still a large number of specific constraints, impeding the development of our foreign-invested financial institutions,” said Huang, pointing in particular to restrictions in three areas:
- There are many financial areas where foreign investors are treated differently prior to approval, and so cannot obtain approval;
- Foreign investors can engage in banking, securities and insurance operations, but they are subject to equity restrictions such as a cap of 25% equity in some cases, 49% in others, and restrictions on controlling shares and whole investment;
- Restrictions on legal person licenses and business scopes, with foreign invested businesses given more limited business scopes.