On July 20, 2019, the Office of the Financial Stability Development Committee of the State Council announced a series of policy measures for further opening up of the financial industry, including allowing foreign-funded institutions to conduct credit rating business in China. On January 28, 2019, S&P Credit Rating (China) Co., Ltd. received approval to enter the Chinese interbank bond market to carry out all types of credit, including financial institution bonds, non-financial corporate debt financing instruments, structured products, and overseas main bonds. In the next step, PBC and CSRC will further promote the opening of the rating field, continuously expand the business scope of foreign-rated rating agencies, and allow more qualified foreign-rated rating agencies to carry out all types of credit rating services in the interbank bond market and the exchange bond market.
The following measures are to be introduced toward external opening of the financial sector:
- Allow foreign-invested institutions to conduct credit rating business in China—they can rate all types of bonds in the interbank bond market and the exchange bond market
- Encourage overseas financial institutions to participate in the establishment and investment of shares in commercial bank financial management subsidiaries
- Allow overseas asset management institutions to establish joint ventures with Chinese banks or insurance companies to establish wealth management companies controlled by foreign parties
- Allow overseas financial institutions to invest in the establishment and participation of pension management companies
- Support foreign investment to establish or participate in currency brokerage companies
- Advanced the transition period from the 51% increase to the 100% for foreign-invested foreign-invested stocks from 2021 to 2020
- Introduced measure related to cancellation of domestic insurance companies holding a total of not less than 75% of the shares of the insurance asset management company, allowing foreign investors to hold more than 25% of the shares
- Relax the conditions for entry of foreign-invested insurance companies and cancel the 30-year business life requirement
- Advance the time limit for the cancellation of foreign shares of securities companies, fund management companies, and futures companies in 2021 to 2020
- Allow foreign-funded institutions to obtain the Class A lead underwriting license for the interbank bond market
- Further facilitate the investment of overseas institutional investors in the interbank bond market
As the internationalization process of China's financial market continues to accelerate, the introduction of international credit rating agencies to carry out rating business in China is conducive to meeting the diversified needs of international investors and is also conducive to promoting China. The improvement of rating industry rating quality has positive significance for the healthy development of the financial market in China.
Keywords: Asia Pacific, China, Banking, Insurance, Foreign Funded Institutions, Credit Ratings, Asset Management Companies, CRA, PBC
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