Currently, China, the world’s second-largest economy fight slowing growth. Moreover, China also fights a damaging trade war with the United States. Consequently, last Saturday, China opened some restrictions on foreign investment in the financial sector. That move shows China welcomes more foreign investment.
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China is going to remove shareholding limits on foreign investment of securities, insurance, and fund management firms. The plan is expected to be completed by 2020. Besides, China will also encourage foreign investors to set up firms. The firms are anticipated to be wealth management, currency, or brokerage firms.
In addition, foreign insurance companies will also get lesser entry barriers. For instance, they do not have to pay a 25% equity cap.
China has long promised to be more open to foreign business participation. However, it has generally moved backward.
Last November, China made a change. It allowed Germany’s Allianz to launch a 100 % foreign-owned Subsidiary. While in December, China’s securities regulator authorized Swiss Bank UBS to take a controlling stake in its local business.
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Weak Chinese Growth
The step is taken because of the need to grow following weak its weak economy figures. In the second quarter, China’s growth was in its weakest performance. The number was 6.7% the lowest in at least 27 years.
The slow growth is a direct consequence of the trade war with the United States. The United States tries to force Beijing to open up its economy and limit what he calls as unfair trade practices.
China has tried to handle the low economic growth. For instance, it has introduced a massive tax cut. However, they have not escaped the domestic slowdown.
On the G20 summit in Japan on June 29, Trump and Chinese President, Xi Jinping agreed to revive their fractious trade. Their negotiators have also held phone talks to discuss the matter.
The talks and the effort of China welcomes more foreign investment are expected to boost China’s economic growth.
