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E-mail China.org.cn, February 7, 2024
Economic Daily:
The Central Financial Work Conference stressed that we should work hard to advance high-level opening-up of the financial sector, steadily expand institutional opening-up, and attract more foreign financial institutions and long-term capital to invest and operate in China. How will the NFRA implement the guiding principles of the conference to promote the high-level opening-up of the banking and insurance industries? Thank you.
Xiao Yuanqi:
Thank you for your question. I'll answer this one. We recently launched over 50 measures to promote opening-up of the financial sector, which can be summarized in the following aspects:
First, we have scrapped restrictions on the ratio of foreign shareholding in banking and insurance institutions, including restrictions on equity investment, acquisition and capital increase in financial institutions. Foreign investors can now hold 100% of shares of a banking or insurance institution in China, gaining full ownership. There are now such institutions, including wholly foreign-owned insurance companies, wealth management companies with foreign majority ownership, wholly foreign-owned money brokerage companies, and wholly foreign-owned insurance asset management companies. They have all been approved to open for business and are operating well at present. In addition, all the restrictions concerning the financial sector in the negative list for foreign investment have been removed.
Second, we have significantly eased the quantitative entry thresholds for foreign institutions. Requirements in the past regarding total assets and operation terms for foreign-funded banks and insurance institutions have now all been canceled. More emphasis is now laid on comprehensive assessment of the qualification of foreign investment. For another example, the types of institutions have also been greatly enriched. Now various foreign financial institutions, including banks, insurance companies, brokerage companies, wealth management subsidiaries and asset management companies, have been established in China and are operating well. There are now five wealth management subsidiaries with foreign majority ownership in China and they have very good experience and practices concerning product design and risk control and prevention. For another example, foreign-funded banks and insurance institutions now have exactly the same business scope as their Chinese counterparts and receive full national treatment.
As of the end of last year, foreign-funded banks had established 41 legal-person banks, 116 branches of foreign and Hong Kong, Macao and Taiwan banks, and 132 representative offices in China. The number of operating institutions totaled 888 and total assets reached 3.86 trillion yuan. Overseas insurance institutions had established 67 operating institutions and 70 representative offices in China. The total assets of foreign-funded insurance companies reached 2.4 trillion yuan and their market share in the domestic insurance sector had reached 10%, a relatively high proportion. With in-depth participation in the development of China's economy and finance and in the operation of the financial market, foreign-funded financial institutions have become a very important force in China's financial sector.
We will further align with relevant rules and regulations in the financial sector in international high-standard economic and trade agreements, and resolutely continue to advance high-level opening-up in the financial sector. On the basis of implementing the pre-establishment national treatment plus negative list management system, we will adhere to the market-based, law-based and international principles and welcome various foreign-funded institutions and long-term capital to China to set up and develop businesses. We will encourage foreign-funded financial institutions to carry out extensive cooperation with their Chinese counterparts in equity management and product development, such as through exchanges and training for technologies and personnel.
At the same time, we also welcome foreign-funded institutions with professional expertise in wealth management, asset management, asset utilization and disposal, as well as climate change response, green finance and sustainable operations to come to China to engage in various forms of cooperation. We will also support foreign financial institutions to deeply engage in supporting Shanghai and Hong Kong to cement their positions as international financial centers. China will continue to expand the opening-up of the financial sector.
That's all for my answer to your question.
In addition, I would like to add a few words to the earlier question with regard to improving the credit structure of banks. In terms of regulation, we have introduced two very important quantitative regulatory measures and rules for optimizing the structure of credit assets. First is the regulation of credit and loan concentration where credit granting and loans to a single customer, a single group and a single sector are all linked to capital, with very strict proportions, to prevent financial resources only flowing to large enterprises. There is another very important regulatory indicator. We have launched a joint credit granting mechanism where banks are able to share information concerning credit granting and financing regarding the same enterprise. By doing so, we will ensure that the corporate debt ratio will not be pushed up to a high level and financial resources are utilized in areas where they are most needed, so as to meet the actual and reasonable financing needs of different enterprises, individuals and market entities, avoid funds circulating within the financial sector without entering the real economy, and increase the efficiency of the use of funds.
That is all from me. I would like to thank you and all the friends from the media for your questions. Thank you all again for your interest in and support for the work on finance, especially the regulation work of the NFRA. Thank you.
Xing Huina:
Today's briefing is hereby concluded. Thank you to all the speakers and friends from the media.
Translated and edited by Xu Xiaoxuan, Wang Wei, Li Xiao, He Shan, Lin Liyao, Huang Shan, Cui Can, Li Huiru, Xiang Bin, Wang Yanfang, Zhang Lulu, Wang Qian, Liu Sitong, Zhang Rui, Xu Kailin, David Ball, Tom Arnsten, and Jay Birbeck. In case of any discrepancy between the English and Chinese texts, the Chinese version is deemed to prevail.
