http://www.bjreview.com AUGUST 1, 2019 BEIJING REVIEW 37
BUSINESS
Copyedited by Rebeca Toledo
Comments to [email protected]although still under a strict approval system—
which will enrich market players, infuse vitality,
introduce mature pension management experi-
ence and improve the standards of investment
management, a representative from the China
Banking and Insurance Regulatory Commission
(CBIRC) said.
Growing through competition
Along with overseas pension management
companies, there are three other measures
related to the insurance industry which target
overseas life insurance companies, insurance
asset management companies and insurance
companies, bringing a wave of change to the
insurance market.
The easing of restrictions on the foreign-
invested shareholding ratio will increase the
voice of foreign shareholders so that the inter-
national business practices will be enhanced in
the country, the CBIRC said.
Zhu Junsheng, an insurance researcher
at the Development Research Center of the
State Council, said the cancellation of the 30-
year business life requirement that previously
restricted entry “is in line with the current devel-
opment of the international insurance market,”
which allows innovative companies that inte-
grate technology and insurance but have a
short business life to enter China. It is meant to
facilitate the innovation of domestic insurance
products and business models.
In addition, foreign-controlled wealth man-
agement companies and wholly owned foreign
currency brokerage companies are expected to
enter the market under the new measures.
Currently, all subsidiaries of banks’ asset
management business are solely invested in by
Chinese commercial banks although they are
DOORZHGWREHEXLOWMRLQWO\ZLWKRYHUVHDVĶQDQFLDO
institutions. The new measures allow the joint
ventures of wealth management companies
to be controlled by the foreign side. Such an
arrangement intends to introduce advanced
asset management practices, promote the
healthy development of the capital market,
enrich market players and products, and meet
diverse demands, according to the CBIRC.
Healthier capital market
By obtaining the Class A lead underwriting
license, foreign-funded institutions are on
an equal footing with domestic institutions.
Previously, the scope of business for foreign-
funded institutions was restricted to Panda
bonds—renminbi-denominated bonds from
a non-Chinese issuer sold in China. The new li-
cense will enable them to underwrite bonds like
their domestic peers.
The move will further empower foreign
institutions to serve the domestic real economy
and is conducive to introducing foreign capital
for domestic enterprises to raise money
through the issuance of bonds so as to solve
financing difficulties, a spokesperson with the
People’s Bank of China (PBOC), the central bank,
said.
Currently, foreign investors can enter
China’s capital market through the Qualified
)RUHLJQ,QVWLWXWLRQDO,QYHVWRUWKH50%4XDOLĶHG
Foreign Institutional Investor and the Bond
Connect programs, along with other chan-
nels. But the separation of different channels isinconvenient for the same overseas investment
entities.
The new measures are aimed at facilitating
overseas institutional investors in the interbank
bond market. The PBOC spokesperson said the
new measures reflect the demand for high-
level opening up of the capital market. Q&RPSLOHGóE\ó%HLMLQJó5HYLHZ óGHVLJQHGóE\ó3DPHODó7REH\Eleven Measures to Further Open Up
China’s Financial Market
Opening Up of the Bond Market
Foreign-invested companies are allowed to conduct credit rating business
in China, including all types of bond ratings in the interbank bond market
and the exchange bond market.
Foreign-funded institutions are allowed to obtain the Class A lead underwriting
license for the interbank bond market.
The investment of overseas institutional investors is further facilitated in the interbank
bond market.Opening Up of the Bank and Insurance Industries
Wealth management companies:
2YHUVHDVĶQDQFLDOLQVWLWXWLRQVDUHHQFRXUDJHGWRSDUWLFLSDWHLQWKH
establishment and investment of shares.
Overseas asset management institutions are allowed to establish joint ventures with
subsidiaries of Chinese banks or insurance companies to establish wealth management
companies which are controlled by the foreign side.
Insurance companies:
2YHUVHDVĶQDQFLDOLQVWLWXWLRQVDUHDOORZHGWRVHWXSRUWDNHVWDNHVLQSHQVLRQPDQDJHPHQW
companies.
The shareholding ratio of foreign insurance companies in the total equity of foreign-invested
life insurance companies is increased from 51 to 100 percent. The schedule for the transition
period has been pushed ahead to 2020 from 2021.The regulation that domestic insurance companies shall hold no less than 75 percent of
the total shares of insurance asset management companies is no longer in effect, allowing
foreign investors to hold more than 25 percent of the shares.
7KHHQWU\TXDOLĶFDWLRQVIRUIRUHLJQLQYHVWHGLQVXUDQFHFRPSDQLHVDUHUHOD[HGZLWKWKH
cancellation of the entry restriction of 30-year business life requirement.
Currency brokerage companies:
Foreign investors are encouraged to establish wholly owned currency brokerage companies
or hold shares in them.Opening Up of the Securities Industry
The schedule for canceling the limit on the foreign-invested shareholding
ratio for securities companies, fund management companies and futures
companies has been pushed ahead from 2021 to 2020.