Central Bank: China to open up financial sector boldly

World
Europe

China can be bolder with opening up its financial sector, Zhou Xiaochuan, governor of the country’s central bank said on Friday at a press conference on the sidelines of the annual session of the National People's Congress, the national legislature.

“Now, we enter a new stage, where we can be bolder with opening up marketing access [to foreign investors] and be more open [in the financial sector],” said Zhou.

The country has made preparations for opening up market access since the late 1990s, even before joining the WTO, according to Zhou. But the work decelerated when financial crises occurred globally.

The opening up of the finance sector includes not only widening market access for foreign investors, but also expanding China-funded financial institutions overseas and promoting the global use of renminbi (RMB), he said.

“Over the past five years, we have launched Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect, and Bond Connect linking Chinese mainland and Hong Kong. These are all opening up the financial market,” said Zhou.

“It is expected that the sector will open up more."

Yi Gang, deputy governor of the People's Bank of China, speaking at a press conference in Beijing, March 9, 2018. /Xinhua Photo

However, accelerating the process does not mean loosening financial regulation, according to the central bank's deputy governor, Yi Gang.

“When a foreign-funded financial institution wants to enter the Chinese market and conduct business, it must still be subject to prudential supervision in accordance with relevant laws and regulations,” said Yi.

“We can effectively prevent and defuse financial risks by strengthening financial supervision, and maintaining financial stability.”

RMB internationalization

The internationalization of the RMB also helps boost the opening up of the financial market and the country will steadily and gradually promote capital account convertibility, according to Zhou.

“Major policies have already been introduced, that is, the use of RMB has been allowed in trade and investment, and the RMB has joined the IMF’s SDR basket,” he said.

“I think that there are still more things that can be done in terms of connectivity between Chinese and global capital markets…There has been some progress in these areas. In addition, the connectivity in other aspects of the entire financial market will also be enhanced,” added Zhou.

Central bank: China's actual interest rate, forex reserves remain stable