China's ongoing financial reform and opening up has attracted an increasing number of foreign financial institutions to establish and expand their operations in the country.
China has the presence of 24 global systemically important banks so far, and nearly half of the world's top 40 insurance companies have established branches in the country.
Last month, four foreign financial institutions in securities and reinsurance opened new branches in Shanghai, including Hannover Re, a German reinsurer.
The company obtained its permit to open in less than four months after China's policies to allow foreign reinsurer branches to set up reinsurance centers in Shanghai's Lingang Special Area at the China (Shanghai) Pilot Free Trade Zone, according to Lye Fook Kong, general manager of Hannover Re Shanghai branch. "They specifically made it possible for us. I know it was an issue to begin with, but they molted it down and they spent time and they really worked hard on it. There was a lot of discussions. Everybody's working very sensibly. Imagine that. I have received calls from them over the weekends, I mean discussing with them. And everybody's working overtime just to get it done," said Lye.
So far, five foreign institutions have gotten the approval to open reinsurance centers, and two brokerage firms received approval for reinsurance branches.
Now, Shanghai's Lujiazui area is home to more than 150 foreign financial institutions, many of which have moved there in the past two years.
China has introduced more than 50 measures to ease market access for foreign financial institutions.
In January this year, the People's Bank of China and other four departments rolled out 20 measures, allowing foreign financial institutions to start new services, streamlining approvals, and supporting cross-border services. These measures, piloted in cities such as Shanghai and Guangdong, have created a fair, transparent, and predictable market for foreign financial institutions.
"In recent years, China has greatly expanded market access in the financial services sector, completely removed foreign ownership caps, and expanded cross-border investment and financing channels. Foreign financial institutions in banking, securities, insurance, and asset management are entering the Chinese market at a faster speed. The financial opening up has paced up remarkably to a higher level," said Dong Ximiao, a chief researcher of Merchants Union Consumer Finance Company, Ltd.
China's financial sector has developed a multi-channel, multi-layered opening up, covering stocks, bonds, derivatives, and foreign exchange markets. Its bond market, the second largest globally, has 4.3 trillion yuan (about 589.68 billion U.S. dollars) worth of outstanding bonds of foreign institutions held in custody.
China's financial opening up attracts growing number of foreign institutions
