Foreign firms will be allowed to own up to 51 percent in securities ventures, Vice Finance Minister Zhu Guangyao said at a briefing in Beijing on Friday.
China will remove foreign ownership limits on its banks and asset-management companies, and allow overseas firms to take controlling stakes in local securities ventures, as the country continues to liberalize its mammoth financial industry.
The undertaking was confirmed in a press release authorised by China's State Council today, indicating that it has been approved at the highest level. This is the biggest step towards financial sector liberalization since China allowed foreign banks to run locally incorporated business in 2007.
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In fact, the only concrete commitment in terms of timings in the statement related to insurance firms, stating that foreign investors will be free to take up to a 51% stake within three years, with the cap removed entirely within five. Swiss banks Credit Suisse and UBS have both said they would like to increase their shareholding in their Chinese joint ventures. While China has already made big strides in opening its equity and bond markets to foreign investors, global banks and securities firms have always been frustrated by ownership caps that made them marginal players in one of the fastest-expanding financial systems on Earth.
China has announced plans to relax foreign ownership restrictions on Chinese banks.