CBIRC Commits to Higher Foreign Investment Ceiling for Chinese Financial Institutions

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The China Banking and insurance Regulatory Commission (CBIRC) says it will ensure that measures to raise the ceiling on foreign ownership of key financial institutions are fully implemented.

Beijing announced in April that it would allow foreign investors to acquire controlling stakes in key financial institutions, including securities companies, funds companies, futures companies and some insurers.

Speaking at the 2018 Financial Street Forum in Beijing on 29 May, Huang Hong (黄洪), vice-chair of CBIRC, said the regulator would “firmly and unwaveringly advance the external opening of China’s banking and insurance sector, ensure the implementation of key measures to raise foreign investment equity thresholds, encourage banking and insurance institutions to introduce overseas specialist investors, and expand the business scope for foreign-invested institutions.

According to Huang these moves are a part of “raising the high-quality growth of banking and insurance sector services, comprehensively driving various reforms, fully employing the role of the market in determining resource allocation, better employing the role of government, and driving banking and insurance institutions to accelerate improvements to a modern financial enterprise system with Chinese characteristics.”

Huang said that in future CBIRC would also “deeply implement differentiated lending policies, actively and safely develop market-based, rule-of-law based debt-for-equity swaps, utilise the role of insurance as an economic anti-shock device and social stabiliser, and raise the supply of high-quality insurance in areas including agriculture, aged-care and health.”

The regulator also committed to “vigorous development of financial inclusion, and resolving the financing difficulties of small and micro-enterprises,” with the launch of quantifiable indices for the later area.

“Resolving the issue of costly finance will require hard measures, with a focus on expediting industry upgrade…and supporting the development of hi-tech industry.”

Huang revealed that as of the end of the first quarter the renminbi and foreign currency assets of Chinese banking-sector financial institutions reached 256 trillion yuan (approx. USD$39.84 trillion), making the sector the largest in the world in terms of assets.

Total assets of the Chinese insurance sector were 17.2 trillion yuan, making it the world’s second largest insurance market.

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