China’s Congressional Members Call for Greater Opening of Capital Market to Foreign investment

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Leading members of China’s legislative bodies have called for further opening up of the Chinese capital market to foreign investment during the annual Two Sessions congressional event for 2023.

Li Dan (李丹), a member of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC) and chief partner of PricewaterhouseCoopers Zhongtian Accounting Firm, said to state-owned media that China should further develop a more internationalised and market-oriented A-share sector.

Li called for improving the inclusiveness of market access, policies and regulations for foreign investors, and allowing a more diverse range of foreign-invested enterprises to enter the Chinese share market.

He also proposed increasing the adaptability and flexibility of capital market rules, formulating issuance conditions that are more inclusive of the business characteristics of foreign-invested enterprises; moderately relaxing the restrictions on shareholding reductions after listing, and attracting different types and sizes of multinational companies to enter China’s capital market on a stage-by-stage basis.

Tian Xuan (田轩), deputy to the National People’s Congress (NPC) and deputy dean of Tsinghua University’s PBC School of Finance, called for adopting multiple measures to accelerate the entry of foreign qualified institutional investors (QFIIs) into the Chinese market. According to Choice statistics, as of March 10, 740 institutions had registered as QFIIs in China.

Tian also called for further optimisation of the stock market connect mechanisms, steadily promoting the opening up of the Chinese bond market, and continuing to diversify the “cross-border asset allocation toolbox.”

In 2022, China’s actually used foreign capital exceeded 1.2 trillion yuan for the first time, for a year-on-year (YoY) increase of 6.3. According to official data, as of the end of the third quarter of last year, the market value of A-shares held by foreign investors reached 2.77 trillion yuan, accounting for 4.35% of the total value of A-shares in circulation.

“Market participants believe that the accelerated pace of ‘bringing in’ and ‘going out’ of China’s capital market will inject new momentum into the development of the world economy,” said an opinion piece published by Shanghai Securities Journal during the Two Sessions congress.