China Financial Markets: Restrictions eased on foreign ownership of joint ventures

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Moving to China's financial markets. China's securities regulator and the banking and insurance watchdog have released a series of new guidelines for foreign investment in joint securities ventures. We show you what to watch out for.

New guidelines for foreign investment in Chinese securities joint ventures. China over the weekend eased some restrictions and launched an application process for more foreign ownership.

The file is for immediate implementation.

Restrictions limiting single foreign investors to a 30 percent stake in securities ventures, either directly or via a partner, were removed.

Major international banks are likely to beef up their presence in the Chinese mainland securities business with the new policy in place.

Foreign banks previously could only own up to 49 percent of their securities joint ventures in China.

That lack of control and limited contributions to revenue have long been a source of frustration.

HUANG YIPING PEKING UNIVERSITY PROFESSOR "Now we have an active measure to improve market access for foreign investors, a key step of economic opening-up. Less restrictions will push China's market standards higher and translate into better economic growth."

Meanwhile, China's regulator for banking and insurance on Friday decided to allow foreign banks to expand their business scopes in China.

The change will let foreign banks enter new businesses such as the underwriting of government bonds, and will lift foreign ownership limits on banks and financial asset management firms.

Foreign insurance brokers will have the same business scope as their Chinese counterparts.

Broadly, China will encourage foreign investors to enter its trust, financial leasing, auto finance, money brokerage, and consumer finance sectors. The move is expected to take effect before the end of this year.

Foreign businesses will be allowed to own up to 51 percent of shares in life insurance joint ventures. That cap will be phased out over three years.