China has introduced more than a dozen financial opening-up policies this year. A key milestone is the official inclusion of A shares in the MSCI index. What's at stake for China to hold on to the opening up momentum under the bigger exposure to global risks?

“Opening-up doesn't mean relaxing regulations.” That's the word from China's central bank governor Yi Gang. Yi said China has to insist that financial services are licensed businesses and every financial institution, no matter Chinese or overseas, has to obtain certain official rules before operating in China.

Three years from now, there will be no stake limit on foreign banks, asset managers, brokerages and insurers in their own China ventures. And the MSCI now officially covers the mainland A-shares. What's next in the policy radar? 

"This is going to be a step-by-step process. This is very important also from a risk management perspective because if you suddenly move things too quickly, this itself could be damaging. Then, you may be forced to roll back, and this loses credibility both internationally and domestically,” said Michala Marcussen, group chief economist of Societe Generale, concluding “good ideas, good pace, and the right measures at the right time." 

And that's crucial when global central banks are in a defacto tightening cycle. Jimmy Zhu, Chief Strategist at Fullerton Markets Chief Strategist, said that any dollar rally not from the Fed side would provide more relax room for the China continues to open its account. 

After years of government incentives for SME loans, the bulk of China's bank credit still goes to less efficient state firms. That results in banks' low return on equity and slow innovation. Xiang Songzuo, professor at school of Finance in Renmin University of China, said that only competition from home and abroad can alter the situation. 

"Look at small and medium sized enterprises. They still face very difficult problems to get credit. What's the reason? Even now SOE contribute less and less GDP growth, employment, SOE still got a very big pie of total credit. I think that's unfair. That's inefficient," said Xiang.  

Jimmy Zhu said the market actually provide the overseas investors a platform to diversify their portfolio and their prospering also increased the institutional investment in the Asia’s market

“But for the domestic investors, we see this year, the A-share market stop [being] more sensitive to the overseas news like Fed and also the tariff. So, probably domestic investors need to pay more attention to the overseas macro-economic picture as well,” he added.  

The consensus in the market is that China's financial opening-up is less about competition and more about education, as China's own financial institutions are too bulky to be efficient and transparent. And it may also be a learning process for the regulators to boost their risk tolerance, which is a vote of confidence for more market innovation and opening up.