China further opens banking and insurance sectors to foreign companies
China on Tuesday loosened demands on foreign banks and insurance firms in an effort to bring in overseas capital and stimulate its financial sector.
The move was announced by the State Council — China’s cabinet — headed by Premier Li Keqiang.
Under the new rules, foreign insurance companies are no longer required to have been active in the industry for 30 years, or have had a representative office in the country for two years, as had previously been mandated.
Lenders, meanwhile, will now be able open wholly foreign-owned banks and branches.
The required amount of fixed-term renminbi deposits was also lowered. Branches’ threshold will be reduced to 500,000 yuan ($70,422) from 1 million yuan ($140,841) per deposit.
Though companies’ ability to apply for the new opportunities takes effect immediately, it is unclear how long approval processes will take, or how complicated procedures will be. In the past, foreign entities have often had to jump through substantial bureaucratic hoops and sometimes wait years before approval to conduct business in China.
Last year, Beijing granted majority control of financial-services firms, prompting several foreign companies to take control of their China joint ventures. Futures firms will be able to apply for full ownership of their mainland ventures beginning Jan. 1, according to the China Securities Regulatory Commission. Loosened rules for mutual funds and securities firms are expected later in 2020.
Other industries have been promised reform. Beijing said restrictions on the manufacture of commercial vehicles will end next year, and those on passenger cars in 2022. Last year, China began allowing complete foreign ownership of new-energy vehicle companies.
After Tuesday’s announcement, the Shanghai Composite Index
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