Recently, there has been new news about the opening of China’s financial industry: The People’s Bank of China and other six departments have proposed to coordinate and simultaneously promote the opening of the inter-bank bond market and exchange bond market to the outside world. JPMorgan Chase announced that it will wholly-owned a joint venture securities company under its control, the country’s first wholly foreign-owned company. The currency brokerage company officially opened, and the wholly foreign-owned Fidelity Fund was approved...
Relevant persons pointed out that in recent years, the opening up of China's financial industry has been progressing in an orderly manner, and positive progress has been made. A total of more than 100 foreign-funded banks, insurance, securities, payment and clearing institutions have been approved.
Next, China will promote the formation of a higher level of financial opening based on the negative list, optimize the entry threshold requirements for foreign banks, insurance and other financial institutions, and the Chinese financial market will be more attractive to foreign capital.
"We are optimistic about China in the long run"
"The ability to establish and operate a wholly-owned securities company in China is another important milestone we have reached in this key market." said Guo Libo, chairman and CEO of JPMorgan Chase Asia Pacific. In the context of development and diversified customer needs, this move will further strengthen JPMorgan Chase’s business strength in China."
A few days ago, JPMorgan Chase announced that the controlling shareholder of JPMorgan Chase Securities (China) Co., Ltd., JPMorgan Chase International Capital Co., Ltd., has been allowed to file for the transfer of equity held by five domestic shareholders and becoming the sole shareholder of JPMorgan Chase Securities (China). JPMorgan Chase Securities (China) will become China's first wholly foreign-owned securities company.
From the abolition of investment quota restrictions for qualified foreign institutional investors (QFII) and RMB qualified foreign institutional investors (RQFII), to the abolition of restrictions on foreign shareholding in the fields of banking, securities, fund management, futures, and personal insurance, to the abolition of corporate levies Credit rating, credit rating, payment and clearing and other fields of access restrictions... In recent years, China’s financial opening has made a series of practical measures to attract international financial institutions to enter the Chinese market. The first foreign-owned securities company, the first wholly foreign-owned life insurance company, the A number of “firsts” such as a foreign-owned wholly-owned futures company and the first wholly-owned foreign-owned public offering fund have been born one after another.
It was approved for construction in September last year and officially opened in July this year. In less than a year, China’s first wholly foreign-owned currency brokerage company Ueda Yagi Currency Broker (China) Co., Ltd. ran out of “acceleration” in its deployment in China.
Huang Hong, president of the company, said: "We are optimistic about China for a long time and will continue to improve our business product lines and business systems through financial technology innovation, and provide customers at home and abroad with the most cutting-edge and thoughtful services in the industry." It is reported that Ueda Yagi has registered capital. It is RMB 60 million, and its business scope includes foreign exchange market transactions, money market transactions, bond market transactions, and derivatives transactions both at home and abroad.
From setting up companies to launching business, foreign institutions have accelerated their pace of development in China.
On August 30, BlackRock's first public offering product went on sale.
As China’s first wholly foreign-owned public equity fund company, BlackRock Fund Management Co., Ltd. officially opened in Shanghai in June this year. The company’s chairman Tang Xiaodong said: “The further opening of China’s financial industry has given BlackRock greater development opportunities and Space. BlackRock has been deeply involved in the Chinese market for more than 15 years. We will launch a series of public fund products in the Chinese market with a global-view investment research platform and industry-leading risk management system."
RMB assets are favored
Foreign capital not only actively establishes new companies in China, but also "groups" to increase their holdings of RMB assets.
According to the latest data released by the Shanghai Headquarters of the People's Bank of China, as of the end of July 2021, interbank market bonds held by foreign institutions were 3.77 trillion yuan, an increase of 0.52 trillion yuan from the end of December last year, accounting for approximately the total amount of interbank bond market custody. 3.5% of it.
In July, 5 new overseas institutional entities entered the interbank bond market; at the end of July, a total of 972 overseas institutional entities entered the market, an increase of 67 from the end of December last year.
"Despite the tense global economic and financial situation, China continues to attract record investment inflows." Nicholas Lardy, a senior researcher at the Peterson Institute for International Economics, a US think tank, said that China is continuing to lead the global economy out of the negative impact of the new crown pneumonia epidemic. , The business environment for foreign-funded enterprises in China continues to improve.
At the same time, with the further opening up of the financial industry, the foreign capital attracted by China has grown rapidly. Since the beginning of this year, the foreign capital flowing into the mainland Chinese stock market and purchasing Chinese government bonds has achieved substantial growth.
In response to the needs of global investors, international mainstream indexes have included RMB bonds.
Following Citi, Bloomberg and JPMorgan Chase’s inclusion of Chinese bonds in their major indexes, starting from October 29 this year, FTSE Russell will include Chinese government bonds in its FTSE World Treasury Index.
Guo Jie, chief professor of finance at Durham University in the United Kingdom, believes that China’s national debt is safe and stable, especially since the outbreak of the epidemic, the international financial market has intensified turmoil, investors have strong risk aversion, and China’s epidemic prevention and control has been properly controlled, and its economic performance has outperformed most of the global economy. It has demonstrated stability even in market volatility, which has prompted RMB bonds to become a safe haven for global investment.
"Calculated according to the inclusion weight of 5.25%, the inclusion of the FTSE World Treasury Index in the next three years will attract hundreds of billions of dollars in international capital for the Chinese bond market."
Including bonds, the current proportion of RMB assets in global asset allocation is relatively higher than that of other emerging economies.
According to Wang Chunying, deputy director and spokesperson of the State Administration of Foreign Exchange, from the perspective of market institutional allocation requirements, after the inclusion of RMB bonds and stocks in major international mainstream indexes, they will take the first place in emerging economies. Foreign investors will continue to do so in the future. Invest in Chinese bonds.
In terms of official configuration, the International Monetary Fund (IMF) recently released data showing that at the end of the first quarter of this year, the proportion of RMB in global foreign exchange reserves rose to 2.45%, reaching 287.5 billion U.S. dollars.
A few days ago, an annual survey report released by the Official Forum of International Monetary and Financial Institutions, a think tank headquartered in London, showed that 30% of central banks in the world plan to increase their holdings of RMB in the next 12-24 months, which is higher than last year. Significantly improved.
At the same time, the report shows that 20% of central banks plan to reduce their holdings in the U.S. dollar in the next 12-24 months, and 18% of central banks plan to reduce their holdings in the euro within the same period of time.
"Looking forward, more overseas institutional investors will allocate RMB assets." said Liu Ligang, managing director of Citibank's research department and chief China economist.
Grasp the implementation of open commitments
Market enthusiasm is high, and policies are reinvigorated.
The State Council executive meeting held on July 21 proposed that the financial sector should continue to implement its commitments on opening up to the outside world, actively benchmarking against international standards with a higher degree of openness, and promoting the formation of a higher level of financial openness based on the negative list.
Optimize the entry requirements for foreign banks, insurance and other financial institutions, and improve the rules for cross-border transactions between parent and subsidiary companies of financial institutions.
Optimize the channels and methods for foreign investment to participate in the domestic financial market.
Zhao Xijun, co-dean of the China Capital Market Research Institute of Renmin University of China, believes that in recent years, China's financial industry opening up measures have been released one after another, and remarkable results have been achieved.
By expanding the opening up of the industry, introducing various financial institutions, businesses, and products, and encouraging healthy competition, can increase the effective supply of finance, which is conducive to the coordinated use of two markets and two resources, optimizes resource allocation, and better meets differentiation and individuality. The demand for financial services is to promote a leap in the service level of the industry, to meet the high-quality development of the real economy and the people’s needs for a better life with better financial services, and to help foreign investors share the opportunities in the Chinese market.
Around the opening up of the financial industry, all localities and departments have accelerated new deployments.
Six departments including the People’s Bank of China recently issued the "Guiding Opinions on Promoting the Reform and Opening up of the Corporate Credit Bond Market for High-Quality Development", proposing to promote the high-level opening of the bond market, improve the institutional framework for overseas issuers to issue bonds in China, and promote more qualified bonds Of overseas rating agencies carry out domestic business.
The State Administration of Foreign Exchange proposed that in the second half of this year, the scope of facilitation pilot projects such as the facilitation of foreign exchange receipts and payments in trade, cross-border investment by private equity investment funds, and integrated domestic and foreign currency fund pools for multinational companies will be further expanded.
As an important agglomeration and exhibition location for global asset management institutions in China, Shanghai Lujiazui recently launched the Global Asset Management Partnership Program, inviting world-renowned asset management institutions, integrated financial service providers, and industry organizations to join in to promote practical cooperation among various financial institutions. Strengthen the communication and exchange of domestic foreign investment management business, the first batch of 82 members, and a series of measures such as unblocking domestic and foreign capital investment channels, strengthening supporting services, and optimizing the rule of law environment.
“Overseas investors are very concerned about the Chinese market and are willing to allocate their assets in China.” said Zhang Chi, general manager of BlackRock Fund Management Co., Ltd. An industry-leading cooperation platform for similar financial institutions, we look forward to working with industry partners to help the development of China's financial market."
"With the steady advancement of the opening up of banking, securities, insurance, funds, futures and other financial sectors, various measures have been implemented one after another, and more foreign capital will enter the Chinese market in the future." Zhao Xijun said.
(Reporter Qiu Haifeng)
Original title: In recent years, the opening up of China's financial industry has progressed in an orderly manner, and more than 100 foreign-funded banks, insurance, securities, payment and clearing institutions have been approved-foreign investment has actively entered China's financial market
"People's Daily Overseas Edition" (07th edition on August 31, 2021)