Page 386 - 2020 White Paper on the Business Environment in China
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0 White Paper on the Business Environment in China
JPMorgan Chase & Co. to take majority stakes in 2017 with a view to opening up the financial
local securities ventures. JPMorgan said in 2018 sector, will provide foreign investors with greater
that it plans to raise its holding to 100 percent access to the Chinese financial services market.
when rules allow (Bloomberg, China Opens Up). For example, the pension management sector
in China is still at an early stage of development
Financial Securities and there are only a limited number of domestic
companies dedicated to the market. CCB Pension
As trade tensions between the US and China Management Co., Ltd., a joint venture between
simmer, Beijing is finally acting on the long- China Construction Bank and the National Council
awaited opening of its massive financial industry— for Social Security Fund of the People’s Republic of
and global financial giants are taking note. From a China, is the first pension management company to
broad perspective, China is showing its welcoming be piloted. In order for foreign investors to be able
gestures towards foreign financial institutions, to invest in this market, the competent regulators
intending to leverage them to expedite reform in will need to issue rules on the requirements and
the Chinese market such as business management, procedures for such investments. As for removing
development strategies, hence becoming more limits on foreign shareholdings in life insurance
competitive in a global context. To be clear, it companies, the Administrative Regulations on
may be years before companies can actually Foreign-invested Insurance Companies will need
take advantage of China opening its insurance to be amended (Lin and Yang).
and other parts of the financial industry further
to foreign institutions. Analysts noted there are Challenges
often licenses and other procedures that can drag
out the process in an industry already dominated China’s economy has been slowing for the
by local players and systems. In October 2019, better part of the past decade, but a recent run
the China Securities Regulatory Commission of poor data has prompted fresh concerns. China
announced a time frame for removing foreign became a key engine of world economic growth
ownership limits in the financial industry, namely as developed countries licked their wounds
in futures, mutual fund and securities companies. after the 2008 global financial crisis. Now, the
The planned rollout of the policy will begin world’s second-largest economy is expanding at
in January 2020. This is another step towards its slowest rate since the early 1990s. China saw
increasing foreign-invested institutions’ long- industrial output grow at its slowest pace since
term confidence in China, and enables these 2002 in August 2019. Domestic issues, the US-
firms to see an even clearer direction,” Charles led trade war, and swine fever are all putting a
Lin, CEO of Vanguard China, said in a Chinese- brake on China’s rapid expansion. Given China’s
language statement translated by CNBC. “China’s importance in the global economy, and its
financial industry and capital markets are full of healthy demand for anything from commodities
vitality and opportunities,” Lin said. “In particular, to machinery, any downturn is likely to have far-
the demand of individual investors for wealth reaching consequences. Gary Hufbauer, of the
management is constantly increasing.” Other Peterson Institute for International Economics,
major foreign financial institutions are eager estimates that a one percentage point drop
to tap the Chinese market. Some have already in Chinese growth would probably take 0.2
been gradually building their business there. “Citi percentage points off global growth. The official
continues to evaluate opportunities to further data paints an increasingly cloudy outlook.
support its clients in China,” the company said Industrial output is growing at its weakest pace
in a statement. A spokesperson noted how the since 2002, and retail sales are slowing. Chinese
company is working to build up its digital wealth exports fell in August 2019 by 1 percent from a
management services, especially in China (Cheng). year earlier, and by a sharp 16 percent to the US—a
clear sign that the dispute with the US is hurting
There is little doubt that, when fully bilateral trade. The impact from the US tariffs has
implemented, this latest policy statement, been offset to some extent by a weaker yuan,
together with other measures introduced since
386
JPMorgan Chase & Co. to take majority stakes in 2017 with a view to opening up the financial
local securities ventures. JPMorgan said in 2018 sector, will provide foreign investors with greater
that it plans to raise its holding to 100 percent access to the Chinese financial services market.
when rules allow (Bloomberg, China Opens Up). For example, the pension management sector
in China is still at an early stage of development
Financial Securities and there are only a limited number of domestic
companies dedicated to the market. CCB Pension
As trade tensions between the US and China Management Co., Ltd., a joint venture between
simmer, Beijing is finally acting on the long- China Construction Bank and the National Council
awaited opening of its massive financial industry— for Social Security Fund of the People’s Republic of
and global financial giants are taking note. From a China, is the first pension management company to
broad perspective, China is showing its welcoming be piloted. In order for foreign investors to be able
gestures towards foreign financial institutions, to invest in this market, the competent regulators
intending to leverage them to expedite reform in will need to issue rules on the requirements and
the Chinese market such as business management, procedures for such investments. As for removing
development strategies, hence becoming more limits on foreign shareholdings in life insurance
competitive in a global context. To be clear, it companies, the Administrative Regulations on
may be years before companies can actually Foreign-invested Insurance Companies will need
take advantage of China opening its insurance to be amended (Lin and Yang).
and other parts of the financial industry further
to foreign institutions. Analysts noted there are Challenges
often licenses and other procedures that can drag
out the process in an industry already dominated China’s economy has been slowing for the
by local players and systems. In October 2019, better part of the past decade, but a recent run
the China Securities Regulatory Commission of poor data has prompted fresh concerns. China
announced a time frame for removing foreign became a key engine of world economic growth
ownership limits in the financial industry, namely as developed countries licked their wounds
in futures, mutual fund and securities companies. after the 2008 global financial crisis. Now, the
The planned rollout of the policy will begin world’s second-largest economy is expanding at
in January 2020. This is another step towards its slowest rate since the early 1990s. China saw
increasing foreign-invested institutions’ long- industrial output grow at its slowest pace since
term confidence in China, and enables these 2002 in August 2019. Domestic issues, the US-
firms to see an even clearer direction,” Charles led trade war, and swine fever are all putting a
Lin, CEO of Vanguard China, said in a Chinese- brake on China’s rapid expansion. Given China’s
language statement translated by CNBC. “China’s importance in the global economy, and its
financial industry and capital markets are full of healthy demand for anything from commodities
vitality and opportunities,” Lin said. “In particular, to machinery, any downturn is likely to have far-
the demand of individual investors for wealth reaching consequences. Gary Hufbauer, of the
management is constantly increasing.” Other Peterson Institute for International Economics,
major foreign financial institutions are eager estimates that a one percentage point drop
to tap the Chinese market. Some have already in Chinese growth would probably take 0.2
been gradually building their business there. “Citi percentage points off global growth. The official
continues to evaluate opportunities to further data paints an increasingly cloudy outlook.
support its clients in China,” the company said Industrial output is growing at its weakest pace
in a statement. A spokesperson noted how the since 2002, and retail sales are slowing. Chinese
company is working to build up its digital wealth exports fell in August 2019 by 1 percent from a
management services, especially in China (Cheng). year earlier, and by a sharp 16 percent to the US—a
clear sign that the dispute with the US is hurting
There is little doubt that, when fully bilateral trade. The impact from the US tariffs has
implemented, this latest policy statement, been offset to some extent by a weaker yuan,
together with other measures introduced since
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