China's much-anticipated launch of its $45 trillion financial industry starts in 2020 - a highly detailed affair that is emerging just as market pressures disrupt the promised windfall catching the attention of global companies.
Beginning with its insurance and futures markets, the communist state must enact the most dramatic changes in as many years to allow JPMorgan Chase, Goldman Sachs Group Inc., and BlackRock Inc. to broaden their foothold in China and compete for a slice of their growing assets.
Chinese leader Xi Jinping aims to protect the world's second-biggest economy against the steepest recession since the early 1990s after a crackdown on risky lending strained corporate finance and a trade war with the U.S. battered exports.
Foreign firms will not only bring fresh resources with them, policymakers expect to push entrenched domestic players to sharpen their operations and become more open to the market.
According to Paul Schulte, Singapore-based founder of Schulte Research and former head of Asia Strategy for Nomura Holdings Inc., China is at a point where regulators and government are comfortable with local business being able to deal with the threat of foreign competition.
Foreign financial firms may plow 7 trillion yuan ($1 trillion) to 8 trillion yuan of onshore assets in the next half-decade, said Huang Qifan, VP for Center for International Economic Exchanges and former mayor of Chongqing province.
The prospects are enormous for the global powerhouses, barring a major economic slowdown or course reversal. According to Bloomberg Intelligence estimates, up for grabs is an additional $9 billion in annual income by 2030 in the commercial banking and securities market alone.
Foreign insurers may apply to set up 100 percent owned units selling life insurance, a segment that accounts for three-quarters of the Chinese insurance market, to kick off the new year.
Joint ventures - the largest of which is Industrial and Commercial Bank of China (ICBC)-AXA Assurance Co. - delivered 8 percent of the total premiums of the sector last year, but did not grow as quickly as domestic rivals, according to Fitch Ratings.
With its large distribution networks and millions of agents, local companies are leading the market, led by China Life Insurance Co. and Ping An Insurance (Group) Co.
The German insurer Allianz SE, which in 2018 had the green light to set up the first entirely foreign-owned insurance holding company, is among those willing to extend their footprint.
Others include Cigna Corp. and Aberdeen Plc. Standard Life, with Cigna calling its alliance with China Merchants Bank Co. a "winning strategy."
