Central Bank Intent on Opening Up China’s Finance Sector Further

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Sources tell Bloomberg that the People’s Bank of China is working on a raft of reforms to expand access to the financial sector for foreign investors.

According to the sources PBOC will hold an internal meeting on Tuesday to discuss its proposals and a schedule for further opening up of the Chinese finance sector.

PBOC will also solicit the opinions of Chinese financial institutions and reviews their experiences collaborating with overseas partners.

The sources said that 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.

Chinese regulators have sent multiple signals of late on the need to further liberalise the domestic finance sector and open it up to foreign investment.

Last week the National Development and Reform Commission revealed that Beijing would open up both the finance and electrical vehicle sectors to foreign investment, while in June PBOC Governor Zhou Xiaochuan said that a surfeit of protections for domestic firms was undermining the industry and fomenting potential financial instability.

Tommy Xie, a Singapore-based economist with Overseas Chinese Banking Corp, said to Bloomberg that policymakers are willing to expose domestic institutions to greater competition in order to reap the benefits of a more open financial sector, particularly as they become more capable and experienced.

“Given the changing dynamics, we think China seems to be less concerned about those costs,” he said.

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