The head of the People’s Bank of China (PBOC) has reiterated Beijing’s commitment to opening up of the Chinese financial sector in a recently published essay.
In the essay “Active and Orderly Expansion of the External Opening of China’s Finance Sector” (主动有序扩大中国金融业对外开放) PBOC chief Yi Gang (易纲) said that the next step would be to “continue to drive comprehensive external opening of the financial sector, and ensure that various measures are truly implemented.”
“The business environment for foreign-invested financial institutions needs further improvement…the path for the opening of the Chinese financial sector remains long and hard,” wrote Yi in the essay published in the book “Twenty Years of 50 People” (50人的二十年).
“The depth and breadth of financial markets remains inadequate….the international competitiveness of the financial sector still needs to be strengthened, and the consistency of the financial system with international standards awaits upgrade.
According to Yi the history of Chinese economic reform has proved that opening has improved the competitiveness of domestic sectors, while closure has led to stagnation and the accumulation of risk.
Expanding the opening of China’s financial sector will “inject new vitality,” as well as help to raise its overall competitiveness.
Yi outlined four sets of measures to expedite further opening of China’s financial sector.
i) Continue to loosen restrictions on foreign investment in Chinese financial institutions, as well as restrictions on forms of establishment and shareholding qualifications.
Ensure that measures for external opening are implemented as quickly as possible, and create an open, inclusive and internationally consistent financial market.
Further improve the Shanghai -Hong Kong Connect and Shenzhen – Hong Kong Connective initiatives, and launch he Shanghai – London Connect initiative as soon as possible.
ii) Further deepen reform of renminbi exchange rate formation mechanisms, raise the efficiency of financial resource allocations, and improve financial adjustment mechanisms.
iii) Steadily drive opening of the capital account in an orderly manner, steadily expand capital account convertibility, and the operation of a fair, transparent and predictable business environment.
iv) Closely integrate expanded opening with heightened regulation, properly develop accompanying measures, effectively prevent and resolve financial risk, and establish healthy and mutually appropriate regulatory frameworks and financial infrastructure.