China has removed a number of restrictions on foreign investment in its financial sector in a move widely seen as an attempt to stimulate the financial sector's growth amid the ruinous trade war launched against it by President Donald Trump.
Among the fiscal stimulus measures set to be implemented until next year include doing away with shareholding limits on foreign ownership of securities, insurance, and fund management firms by 2020. This deadline is a new one with the original deadline set for implementation in 2021.
The Financial Stability and Development Committee (FSDC) said foreign investors will be encouraged to establish wealth management firms, currency brokerages, and pension management companies.
FSDC is a financial regulatory body under the auspices of China's State Council established in 2017 to strengthen coordination between financial regulators while supplementing regulatory shortcomings.
China will also eliminate entry barriers for foreign insurance companies and cancel a 25 percent equity cap on foreign ownership of insurance asset management firms.
In addition, foreign-owned credit rating agencies will now be allowed to evaluate a greater number of bond and debt types, said FSDC.
China has long promised to further open more of its economy to foreign business participation and investment but has generally been hesitant to do so. The need to re-ignite economic growth while fending-off the worst effects of Trump's trade war means China has to take steps to attract more foreign investments.
And to this end, China in November 2018 exempted two European insurers from its strict rule on foreign ownership. It allowed German multinational financial services company Allianz to launch a 100 percent foreign-owned subsidiary, and French multinational insurance firm Axa to take control of its joint venture.
In December, the China Securities Regulatory Commission (the securities regulator) authorized Swiss bank UBS to take a controlling stake in its local business.
Before these moves were announced on Saturday, China's top financial met to discuss financial risk and financial contagion. They also vowed to take new steps to support growth. The talks were led by Liu He, chief of the General Office of the Central Financial and Economic Affairs Commission of the Communist Party of China.
Analysts said the deregulation of the financial services sector was made necessary by the urgent need for growth following weak economic figures released last week.
China's growth posted its weakest GDP growth -- 6.7 percent -- in at least 27 years in the second quarter.
