BEIJING (Reuters) – China will sharply expand market access for foreign banks and securities and insurance companies, especially in its financial services sector, Premier Li Keqiang said yesterday, as senior US officials arrived in Beijing for more trade talks.
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The government will also work on more favourable policies for foreign investors to trade Chinese bonds, Mr Li said in a speech at the annual Boao forum held on China’s southern island of Hainan.
“We are quickening the full opening of market access for foreign investors in banking, securities and insurance sectors,” he said.
Mr Li’s remarks add to speculation that China may soon announce new rules that will allow foreign banks and insurance firms to increase their presence in China.
China has pledged to further open its massive financial markets to foreign investors since last year amid a trade war with the United States. Foreign businesses have long complained that liberalisation has been too narrow and implementation spotty.
Sources told Reuters on Wednesday that the United States and China have made progress in all areas under discussion in trade talks, with unprecedented movement on the touchy issue of forced technology transfers as China had put proposals on the table that went further than in the past, but sticking points remain.
Mr Li said the business scope of foreign banks, as well as market access for credit rating companies, bank card settlements and non-bank card payments, will all be “expanded sharply”, with restrictions on the scope of foreign securities companies and insurance brokers expected to be removed.
“Such measures will be implemented this year in a relatively forceful way,” he said.
Mr Li said China will also announce policies to help foreign investors to invest in and trade China’s bonds, just before Chinese bonds’ inclusion in the Bloomberg Barclays Global Aggregate Index, one of the most widely tracked in the world, scheduled to start on Monday.
But global investors’ access to hedging instruments continues to be restricted, and clarification on tax collection policy is needed, ASIFMA, a financial industry lobby, noted in a report last week.
Mr Li said China will also issue more favourable rules for foreign acquisitions of Chinese listed firms. Beijing is drafting rules related to a new foreign investment law that was passed earlier this month. The rules are expected to be completed this year.
Beijing will revise and shorten a “negative” list of areas where foreign investment is restricted, and will publish it before the end of June, Mr Li said.
In a meeting with foreign and Chinese business executives on Thursday afternoon, the premier said he doesn’t think there is a deficit of trust between China and the United States.
“We need to prevent a trust deficit from occurring – otherwise the damage it could do to US-China relations is incalculable,” said Mr Li, adding that trade frictions remain a sticky point.
China must protect intellectual property, otherwise there is no hope for the nation’s transformation, Mr Li said.
US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin arrived in Beijing yesterday and are scheduled to have a working dinner with Vice Premier Liu He. Talks are expected to last for a full day today.