The head of the People’s Bank of China (PBOC) has called for a range of measures to further open up the Chinese financial sector in an opinion piece published by the flagship newspaper of the Chinese Communist Party.
Chinese central bank governor Yi Gang (易纲) writes that while China’s financial sector opening has obtained a series of successes in recent years, there still remains “very large potential for upgrade.”
“In future [we] need to further expand financial sector opening, and at the same time continually improve and open corresponding financial risk prevention and control systems,” writes Yi.
“Financial sector opening is a key component part of China’s external opening…expansion of the external opening of the financial sector is China’s sovereign decision.
“This is both necessary for the development of the financial sector itself, as well as an intrinsic necessity for deepening financial supply-side structural reforms and achieving high-quality economic growth.”
Yi said that China’s financial sector opening will “continually accelerate,” highlighting five key points for consideration:
- Firmly uphold mutual coordination and progress of financial services sector opening, financial market opening and reform of renminbi exchange rate formation mechanisms. “Financial sector opening must apply equal monitoring requirements and benchmarks to Chinese and foreign-invested institutions with regard to areas including equity percentages, establishment forms, shareholder qualifications, business scopes and licensing volumes, and employ more transparent standards that better satisfy international customs when equally treating domestic and foreign-invested financial institutions.”
- Comprehensively implement a negative list administrative system that provides treatment equal to domestic parties prior to entry. “Chinese-invested institutions and foreign-invested institutions will all be able to lawfully and equally enter areas and businesses aside from those on the negative list.”
- Improve the regulatory provisions for financial sector opening and implement systemic opening. “Accelerate the connection between relevant regulatory provisions and international [standards], continually improve accounting, taxation and other systems.”
- Improve the commercial environment. “Further drive administrative simplification and delegation of authority, optimise administrative reviews and approvals and raise the transparency of approval processes and approval efficiency…strengthen communication and coordination with regard to policy formulation and raise the transparency of policy formation.”
- Improve financial regulation. “Chinese and foreign-invested institutions that engage in financial activities must all hold business licenses and be subject to regulation…while loosening market entry, [we] must continually improve financial regulation to ensure that regulatory capability and the level of opening mutually correspond.”