BEIJING: China has started lifting major restrictions on foreign investment in its financial sector, a move long demanded by the United States as the world’s two biggest economies are locked in a fierce trade battle.
From the start of 2020, foreign banks can now set up wholly-owned branches in China without a local partner holding the majority stake, the banking regulatory authority, CBIRC, announced on Friday.
In the past, foreign banks were required to have a local Chinese partner and not allowed to hold more than 49% of their respective joint ventures.
The announcement could be seen as a gesture of goodwill by China towards the US as Washington says a preliminary trade agreement between the two sides looks set to be signed this month.
The world’s top two economies have been waging a merciless trade war since March 2018, resulting in mutual tariffs being slapped on hundreds of billions of dollars’ worth of annual trade.
Beijing has long promised to further open up its economy to foreign investment, but it was slow to do so in the financial sector.
In October, China unveiled a timetable for lifting a number of the restrictions. And in December, the Swiss bank UBS was authorised to take a majority stake in its activities in the country.
But starting from Jan 1, foreign companies specialising in futures contracts will now be able to invest in China with no limits on the amount of capital held.
Fund management companies will be able to do so from April 1 and brokers from Dec 1, 2020.