China moves to lift restrictions on foreign investment until 2020

BEIJING – China on Saturday lifted some restrictions on foreign investment in the financial sector, while the world's second largest economy is fighting slowing domestic growth and a damaging trade war with the United States.

China will remove foreign ownership limits on foreign securities, insurance and fund management companies in 2020, a year ahead of schedule, the Financial Stability and Development Committee said in a statement published by the central bank.

Foreign investors will also be encouraged to create wealth management companies, foreign currency brokers and pension management companies, the statement said.

Among the other measures being considered include the removal of barriers to entry for foreign insurance companies, such as the 30-year requirement of commercial activity, and the cancellation from a cap of 25% of foreign ownership in insurance badet management companies.

Foreign credit rating agencies will also be allowed to rate more types of bonds and debts, the statement said.

Beijing has long promised to open its economy further to participation and investment by foreign companies, but has generally been slow to implement these measures.

In November, Beijing made an exception for two European insurers, allowing German Allianz to create a wholly foreign subsidiary and the French Axa to take control of its joint venture.

In December, the Chinese securities regulator authorized the Swiss bank UBS to take control of its local activities.

Saturday's announcement followed a meeting on Friday chaired by economic czar Liu He, in which policymakers focused on financial risk management and financial contagion, and pledged new measures to support growth, according to a statement from the state council.

The measures were probably motivated by a pressing need for growth after the weak economic statistics released on July 15th.

In the second quarter, Chinese growth recorded its weakest performance for at least 27 years, at 6.7%.

The anemic figures are a direct result of the trade war with the United States, which US President Donald Trump unleashed in March 2018 to try to force Beijing to open its economy and limit what it calls its business practices. unfair.

The two economic giants have since hit each other with punitive tariffs representing over $ 360 billion in bilateral trade, causing damage to manufacturers on both sides of the market. Peaceful.

Beijing introduced measures, including mbadive tax cuts to boost the economy, but they were not enough to offset the slowdown in the domestic economy and the slowdown in foreign demand.

Trump and Chinese President Xi Jinping agreed to relaunch the stormy trade talks when they met on the sidelines of the G20 summit in Japan on June 29, and key US and Chinese negotiators had telephone talks this month.

It is unclear when the next high-level meeting on trade negotiations will take place.