China regulatory updates

China further opens up financial sector

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At a press briefing on 10 November 2017, China's Vice Finance Minister Zhu Guangyao announced plans to remove caps on foreign ownership in Chinese financial institutions. Foreign investors now have indicative timelines showing when they will be allowed to take controlling stakes in the Chinese financial institutions.

We believe it is a major step forward by the Chinese government showing its determination and confidence in further opening up of China’s financial services sector. There are challenges along with the opportunities for the foreign players. Changes may not be happening overnight but they are affecting all financial sectors and they will be seen to be significant over time. We expect the detailed rules to come out shortly.

Greater foreign ownership could bring in greater competition as well as the potential to build a more robust, transparent financial services sector. It would also lay out a solid foundation for the globalization of Renminbi, the development of the bond and capital market, and relaxation of capital inflows and outflows in the future.

This Point of View highlights the blueprint and EY’s perspectives.

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We believe that foreign banks can look forward to a smoother road to investing into China’s financial sector following the promulgation of Exposure Draft and further implementation rules.