On January 25, 2024, the State Council Information Office held a press conference where the Deputy Director of the National Financial Regulatory Authority, Xiao Yuanqi, described the status of financial services contributing to high-quality economic and social development.
Several key points were highlighted:
1. The foreign shareholding limits in banking and insurance institutions have been removed, including the abrogation of restrictions on the shareholding ratios for foreign investment, acquisitions, and capital increases in financial institutions.
This is particularly significant, as the restrictions on foreign ownership in insurance companies, wealth management companies, and asset management companies have been a hotly debated issue. The discussion about whether to lift these limits has continued until now. Following this press conference, it can be concluded that full foreign ownership is acceptable under strict regulation.
Also important is the adjustment made to the "Negative List for Foreign Investment Access", which is officially known as the "Special Administrative Measures for Foreign Investment Access (Negative List) (2021 Edition)," released on December 27, 2021, and which has been in force since January 1, 2022, for two years now.
The 2021 Edition of the "Negative List for Foreign Investment Access" already reduced the items from its predecessor, further shortening the national and free trade zone negative lists to 31 and 27 items respectively, with a reduction rate of 6.1% and 10%. Now, another reduction has been made specifically in the financial sector.
2. Significantly lowering the quantitative entry thresholds for foreign capital, foreign banks and insurance institutions now have a business scope that is fully consistent with that of Chinese-funded institutions, achieving full national treatment.
Currently, the assessment of foreign capital focuses more on comprehensive quality indicators rather than rigid requirements such as total assets or years of operation.
As foreign investment in domestic financial industries grows, these investors have become an influential force. Overseas insurance institutions have set up 67 business entities and 70 representative offices domestically, with total assets of foreign insurance companies reaching 2.4 trillion yuan, accounting for a market share of 10% in the domestic insurance industry, becoming a core component. Hence, how to regulate them effectively is of great importance.
High participation of foreign capital in the domestic market can bring about problems, but it also provides great benefits, such as advanced product designs, risk management, and so forth, greatly enriching the market and being more beneficial than detrimental to the national financial market.
In recent times, the domestic financial market has been rather turbulent, especially concerning stock market indices. Many investors are rather pessimistic about the future, and this is reflected by the continuous decline in the price of a large volume of shares over several days, causing significant drops in many key indices. At such times, bolstering market confidence becomes exceptionally important. On January 24, the Vice Chairman of the Securities Regulatory Commission, Wang Jianjun, responded to the recent situation in the stock market.
In this interview, Wang Jianjun specifically discussed the recent slump in the stock market and the pessimistic mood amongst investors, stating “Only with real gains for the majority of investors can the capital market develop steadily and healthily on a solid foundation, thereby truly stabilizing the market and confidence.”
This was not the first initiative from the Securities Regulatory Commission in recent times. On January 19, a week before, the Commission held its second press conference of the year 2024, where spokespersons from nine departments of the Commission gathered to address issues of concern to shareholders such as the registration system, supervision, delisting, refinancing, etc. A week earlier, on January 12, the Securities Regulatory Commission announced six administrative regulatory measures in one go, issuing warning letters to three major securities firms: CITIC Securities, Zhongde Securities, and Wanhe Securities.
As can be seen, the domestic financial market is making rocky progress with the concerted efforts of many, and although there are setbacks and difficulties along the way, it is certain to carve out its own shining path.
