BOAO, March 28 — China will allow greater market access for foreign banks and insurance companies, especially in its financial services sector, Premier Li Keqiang said today.
He added China will publish a revised negative list for foreign investors and issue rules for foreign acquisitions of Chinese listed firms.
Li's remarks, made in a speech at the annual Boao forum held on China's southern island of Hainan, add to speculation that China may soon announce new rules that will allow foreign banks and insurance firms to increase their presence in China.
China has pledged to further open its massive financial markets to foreign investors since last year amid a simmering trade war with the United States. Foreign businesses have long complained that liberalisation has been too narrow and on-the-ground implementation spotty.
A senior official at the China's banking and insurance regulator said in a speech last week that Beijing is studying a new round of opening for the financial sector, aiming to achieve the dual goals of greater access as well as stability.
Li added China is also drafting rules related to a new foreign investment law that was passed earlier this month. The rules are expected to be completed this year.
'Hard battle'
In the same speech, Li also sought to ease investors' concerns over China's cooling economy, saying Beijing has enough policy tools to fight a “hard battle.”
Li said China will cut “real interest rate levels” and lower financing costs for Chinese companies, but did not elaborate on which interest rate he was referring to. Li had made similar comments in a speech earlier this month.
Some analysts say shockingly weak industrial profit data yesterday have added urgency for more policy easing.
China's industrial firms posted their worst slump in profits since late 2011 in the first two months of this year as slowing demand at home and abroad took a heavier toll on businesses.
Analysts at Capital Economics said they believe the benchmark lending rate will be cut in the weeks ahead, though sources have told Reuters such a move may be a last resort if the economy does not show signs of responding to previous support measures.
Others China watchers say policymakers may be waiting for March and first-quarter data in mid-April for a better picture of whether conditions are starting to stabilise.
Li said he could not rule out the possibility that there were be some fluctuations in the world's second-largest economy this year, but added that earlier policy steps were gaining traction.
However, Chinese policymakers, including Li, have stressed that Beijing would not resort to “flood-like” stimulus that would unleash huge amounts of cheap credit, out of concern that could add to a mountain of debt.
The central bank has not cut benchmark rates since the last downturn in 2015, but it has been guiding financing costs lower since last year through various means including liquidity injections.
The central bank's fourth-quarter monetary report showed the policy loosening appears to be having some effect, with a drop in average borrowing costs. But a private Beige Book Chinese business survey released on Wednesday showed some firms were reporting higher interest rates, especially those who had turned to shadow bank lending for funds.
China's economic growth cooled to 6.6 per cent last year, the slowest pace in nearly 30 years, and analysts polled by Reuters expect a further pullback to 6.3 per cent in 2019. — Reuters
