“China will greatly open up financial sector.” announced by the Governor of China's central bank Yi Gang

On April 11, 2018 in Boao Asia Annual Conference 2018 “The Normalization of Monetary Policy.”, the People's Bank of China governor Yi Gang said, "the next step, we will follow the following three principles to promote the financial industry opening up to the outside world: Firstly, it is pre-establishment national treatment and negative listing; Secondly, the financial industry's opening up will be coordinated with and jointly promote the exchange rate formation mechanism reform and the convertibility process of the capital account. Thirdly, while opening up, we should attach great importance to prevent financial risks and make match with financial supervision and regulation abilities and financial openness.

Yi Gang said that the openning-up measures in financial sector will be implemented over the next few months: First, to cancel the restrictions on foreign shareholding of bank and financial asset management companies.Domestic and foreign investment are treated equally. To allow foreign banks in China set up branch and sub-branch at the same time; Second, the upper limit of foreign shareholding of securities companies, fund management companies, futures companies and personal insurance companies will be relaxed to 51%, and no restrictions will be imposed after three years.Third, it is no longer to require to have at least one shareholder to be a securities company in mainland in the joint venture securities company; Fourth, to further improve the mechanism of  connectivity between mainland and Hong Kong stock market, the daily quota of interconnection is to be expanded four times from May 1, namely the daily quota of Shanghai Stock Connect Program and Shenzhen Stock Connect Program is changed from 13 billion to 52 billion yuan, and that of Hong Kong Stock Connect Program is changed from 10.5 billion to 42 billion yuan;Fifth, allow qualified foreign investors to operate insurance agency business and insurance business valuation in China;Sixth, we should open up the business scope of foreign insurance brokers and be consistent with Chinese institutions.

Before the end of this year,the following measures will also be introduced: First, encourage banking financial sectors such as trust, financial leasing, car finance, currency brokerage and consumer finance to introduce of foreign capital; Second, there is no upper limit on the foreign shareholding offinancial asset investment companies and wealth management companies newly launched by commercial banks.Third, expand the business scope of foreign Banks significantly;Fourth, no restrictions on the business scope of the joint venture securities company, and the internal and foreign investment is treated equally;Fifth, cancel the requirement of setting up 2 years of representative office before the establishment of foreign insurance companies, Yi Gang said.

"Various opening-up measures previously announced have been smoothly carried forward. We have liberalized market access to the bank card settlement agencies and non-banking payment institutions, to relax the limit on foreign financial services company's credit rating services and grant national treatment to foreign investment credit agency." Yi Gang said, "At present, all departments are working to change the relevant procedures of the laws and regulations, and will materialize them before the above time nodes. In order to facilitate the smooth implementation of the relevant work of the financial sector, the People’s Bank will also provide supporting measures to strengthen financial supervision while expanding the financial sector.While relaxing foreign access and business scope, it is still necessary to regulate equally all kinds of ownership enterprises in accordance with relevant laws and regulations.By strengthening financial supervision, we can effectively prevent and defuse financial risks and maintain financial stability.”

Shanghai Nuo Di Law Firm believes that the intention of the governor of the People's Bank of China is to materialize the keynote speech content made by President Xi in Boao Forum for Asia. During the speech, President Xi announced that China will greatly broaden market access including the financial sector, etc, and the People's Bank and all financial regulators are promptly implementing, in accordance with the deployment of the CPC central committee and the state council, to substantially liberalise finance sector opening-up to the outside world andpromote the international competitiveness.