China’s market continues to open up

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China is set to further open up its financial market. As part of China’s policy priorities, the area that can open up more is the credit rating market.

Meanwhile, China is cracking down on shadow banking activities and squeezing the debt out of the economy. International credit rating agencies are in a better position to give advice on those issues.

“Within the coming years, it is harder for the central government to get true information on the local level. Foreign credit agencies know better how the local government is doing, especially on debt level. Several US rating agencies have already got approval to enter the Chinese market although the approval process is slow,” said Dan Wang, analyst at the Economist Intelligence Unit.

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“Besides that, within the quota for QFII to be raised, that is one way for foreign investors to actually participate to China’s domestic capital market,” added Wang.

As for foreign investors who want to get into the Chinese market, the Belt and Road Initiative is a place to start. The related projects will get policy priority and open a door for foreign financial institutions. At the point, the China’s financial market would to be blooming.

“With the relaxing in QFII, there is a small boost to the stable market, but our view overall is bullish, because there is strong incentive to adjust structure this year, and also the fundamental innovation is improving. There is a case for foreign investors to get more bullish,” Wang signified.

Still, there have been concerns in the market that the strong focus on systemic risk control and aggressive deleveraging is holding China back from bolder reforms. What China tried to do is restore global investor’s confidence, while also getting a tighter grip its market regulation.