There is plenty of room to increase competition in the onshore financial sector, Yi Gang, governor of the People’s Bank of China, told a May 29 conference in Beijing .
H e noted that foreign banks reduced their market share from 2.3% to 1.3% between 2007 and 2017, and that foreign investors only own about 1.8% of bonds in the interbank market. He believes both figures can go up significantly. But first, China must be more open to competition from the outside.
“No matter which metrics you use, our openness is way lower than both developed and developing countries,” he said. “Through competition, China’s financial sector can provide better services.”
For the opening up of the financial sector to have an impact, Yi reckons China must also reform the RMB exchange rate and liberalise its capital account. But he cautioned markets not to expect speedy progress on all three fronts, pointing to lessons learned from the Asian financial crisis.
“This must be an incremental process in China,” he said. “The problems in Thailand in 1997 and some developing countries right now, for example, are caused by either a rigid exchange rate system or a mismanagement of opening up the capital account.”
The launch of the first CDRs is just around the corner, Fang Xinghai, vice-chairman at the China Securities Regulatory Commission (CSRC), said at a May 29 conference in Shanghai. The CSRC outlined the rules for listing the depository receipts earlier in May.
“Very soon, offshore-listed red chip companies will issue CDRs on the stock exchanges in Shanghai and Shenzhen,” he said. “This will connect Chinese technology companies with Chinese capital.”
He also noted that the first product under the London-Shanghai Stock Connect will launch before the end of the year. GlobalRMB took an in-depth look at the proposed equity link this week.
Another CSRC vice-chairman, Yan Qingmin, told a separate conference on Tuesday that making it easier for innovative companies involved in artificial intelligence, renewable energy and biotech to list in China is one of the key objectives for the securities watchdog.
Such companies will help improve the overall quality of listed companies in China, said Yan. The CSRC will help smaller companies source funding, by encouraging angel investments and promoting the development of the National Equities Exchange and Quotations, aimed at smaller firms.
MofCom has urged the US to withdraw its planned 25% tariffs on $50bn of Chinese goods, arguing that it runs contrary to the spirit of the US-China trade talks held in May.
“We are both surprised and unsurprised at the statement, which is obviously contrary to the consensus reached between China and the US in Washington not long ago,” a MofCom spokesperson said in a May 30 statement. “The Chinese side has confidence, capability and experience to defend the interests of our country and her people. We urge the US to act in the spirits of the joint statement.”
US will target technology imports. The final list of goods to be hit by the tariffs will be announced on June 15. The tariffs will kick in shortly after, according to a May 29 statement by the White House.
The threat came after US president Donald Trump said on Tuesday that China has treated the US unfairly in trade, especially in acquiring industrially significant technology from the US. He said the US will implement investment restrictions and export controls for Chinese individuals and entities which it deemed related to acquiring technology from the US.
China is on track to update its negative lists — one that covers the whole country and another that applies only to Free Trade Zones — and implement the revised lists before June 30, Gao Feng, a spokesperson at MofCom, told a May 31 press conference. A negative list covers all the business sectors that are restricted to foreign investment .
Th e new lists will cut the red tap across various sectors, from finance and automobiles to energy and infrastructure, said Gao. The National Development and Reform Commission said in April that China will publish the new lists by the end of the first half.
Gao’s comments came a day after Li Keqiang, the premier, said he wants the government to encourage foreign investors to participate in the trading of crude oil and iron ore futures, and support more foreign financial institutions that want to underwrite local government bonds. Li was speaking at a State Council meeting.