WASHINGTON, Jan 16 ― The long-awaited US-China trade deal touted new wins for US companies looking to access China's US$40 trillion (RM162.7 trillion) financial sector, but many of the changes were already in the works with Beijing stepping up the pace of opening up in the past year.

Under the deal, China has agreed to expedite by nine months a previous December 2020 deadline for removing foreign ownership caps on securities firms, which includes investment banking, underwriting and brokerage operations.

The deal, which was signed by US President Donald Trump at a White House ceremony yesterday, promises improved access to China's financial services for banking, insurance, asset management, payment and fund management.

It aims to address a number of longstanding US complaints regarding investment barriers to China's financial sector, including foreign equity ownership restrictions, discriminatory regulatory requirements, and opaque licencing processes.

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“China is very eager to get more private funds to invest in the economy” to help fuel economic growth, said Andrew Collier, managing director of Hong Kong-based Orient Capital Research.

Foreign financial companies, however, will struggle to corner a bigger share of the market from the dominant state-owned and private Chinese rivals in the near future, he said.

The deal text said that by no later than April 1, China will remove foreign equity limits and allow US investment banks to participate in local securities businesses.

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Foreign investment banks' ownership cap in China securities joint ventures was lifted to 51 per cent in 2018 from 49 per cent. A lack of control and limited contribution to revenue have long been a source of frustration for global investment banks.

While Goldman Sachs and Morgan Stanley are awaiting regulatory nod to raise their holdings to 51 per cent in their China securities ventures, Citigroup plans to set up a wholly-owned securities business after agreeing last year to sell its stake in its previous joint venture.

JPMorgan got a final approval from regulators on December 18 to set up a majority-owned securities venture.

China, which has pledged for years to open up its financial services sector to more foreign competition, previously said the deal would boost imports of US financial services.

But to China-watchers, a key pledge made in the slim financial services section of the deal to scrap foreign equity limits on firms operating in China's fund management, futures and insurance sectors will feel familiar.

“China has already been opening up its markets,” said a Beijing-based lawyer, who works with Chinese regulators.

“The real test will be how quickly the applications and regulatory processes are handled.”

Last July, Chinese Premier Li Keqiang announced China would expedite by a full year its plans to allow 100 per cent foreign ownership in a raft of financial sectors.

This month, foreign ownership limits in futures companies were scrapped, while China said last year that it would do the same for mutual funds by April 2020. A 51 per cent cap on ownership in life insurance ventures was also removed this month.

Likewise, China's pledge yesterday to open up its payments system to US firms comes after its central bank said it had accepted an application from an American Express Co unit regarding starting onshore operations.

Ken Bentsen, CEO of the Securities Industry and Financial Markets Association, which has criticised China in the past for failing to make good on previous promises to level the playing field, struck a cautious note on yesterday's deal.

“We will examine this agreement closely including what it specifically means for our members in terms of its implementation and enforcement,” he said in a statement. ― Reuters