After being threatened by the Trump administration with $150 billion in possible tariffs on China (excluding announced global steel and aluminum tariffs), the country’s leaders have begun explaining how they will open their markets. Trump and China’s President Xi Jinping have both softened their rhetoric this week, and with China coming to the table, markets are hopeful a trade war can be avoided. Tom Mitchell and Hudson Lockett explain China’s latest overture in the Financial Times:
Foreign financial groups will be allowed to take majority stakes in securities, fund management, futures and life insurance companies “within a few months”, China’s central bank said on Wednesday.
The announcement came a day after President Xi Jinping promised to “accelerate” the opening of China’s financial markets and to ease foreign investment restrictions in the automotive, shipbuilding and aviation sectors.
China’s finance ministry first said in November that it would allow overseas companies to take majority stakes in securities, fund management and futures companies, but did not specify a timeline for implementation. At the time Zhu Guangyao, vice-finance minister, also said the foreign investment ceiling in life insurance joint ventures would be raised to 51 per cent, from the current 49 per cent, by the end of 2020.
Beijing has long used ownership caps and joint-venture requirements to protect domestic companies from competition, prompting years of complaints that these restrictions hinder foreign groups in China.
While US President Donald Trump rejected the finance ministry’s November offer as insufficient, Chinese negotiators led by vice-premier Liu He hope that a faster opening of the country’s financial sector will help avert a trade war between the world’s two largest economies.
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