The official newspaper for the Chinese Communist Party has emphasised the need for risk prevention measures and stronger regulation to counterbalance China’s ongoing push for greater reform and opening of the financial sector.
Amidst widespread fanfare in the Chinese press surrounding Beijing’s financial opening drive, a new editorial from the People’s Daily points to the need for heightened caution and attention to risk prevention during the reform process.
While the editorial entitled “China’s Financial Sector Matures within Opening” (中国金融业，在开放中成长) acknowledges the intrinsic need for financial opening in order to modernise the domestic sector, it also calls for heightened regulation in order to deal with attendant risks.
“Opening isn’t laissez-faire, and simultaneous with opening, [we] must focus on the prevention of financial risk, and ensure that financial regulatory capability and the level of financial opening mutually correspond,” said the editorial.
“We cannot overlook strong financial sensitivity and rapid risk transmission…during the expansion of financial sector opening, we must strengthen financial regulation, and treat all companies equally in accordance with laws and regulation. ”
Beijing stressed its commitment to further reform and opening of the financial sector at the 2018 Boao Forum for Asia, with People’s Bank of China governor Yi Gang outlining a slew of new measures, including the removal of caps on foreign ownership in key financial institutions such as banks and asset management companies, as well as permitting majority foreign ownership of securities companies and futures companies.
Other measures for reform and opening of the financial sector by Yi Gang include an expansion of stock trading between mainland and Hong Kong bourses, with a four-fold increase in the daily trading cap for the Shanghai-Hong Kong Stock Connect initiative starting from May.