0816 GMT September 19, 2019
The government will also work on more favorable policies for foreign investors to trade Chinese bonds, Li said in a speech at the annual Boao forum held on China’s southern island of Hainan, Reuters.com reported.
Li’s remarks add to speculation that China may soon announce new rules that will allow foreign banks and insurance firms to increase their presence in China, as senior officials from China and the United States are due to meet in Beijing this week for the next round of trade negotiations.
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 liberalization has been too narrow and on-the-ground implementation spotty.
Li said the business scope of foreign banks, as well as market access for credit rating companies, bank card settlements and non-bank card payments, will all be “expanded sharply”, with restrictions on the scope of foreign securities companies and insurance brokers expected to be removed.
Li said China will also announce policies to help foreign investors to invest in and trade China’s bonds, just before Chinese bonds’ inclusion in the Bloomberg Barclays Global Aggregate Index, one of the most widely tracked in the world, scheduled to start on Monday.
China has eased foreign access to its $13 trillion bond market in recent years, especially through the Hong Kong-based Bond Connect scheme.
But global investors’ access to hedging instruments continues to be restrictive, and further clarification on tax collection policy is needed, ASIFMA, a financial industry lobby, noted in a report earlier last week.
Li added China will also issue “more favorable” rules for foreign acquisitions of Chinese listed firms. Beijing is drafting rules related to a new foreign investment law that was passed earlier this month. The rules are expected to be completed this year.
Beijing will revise and shorten a “negative” list of areas with restrictions on foreign investment, and will publish it before the end of June, Li said.
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.
Li said he could not rule out the possibility that there would 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.
China’s economic growth cooled to 6.6 percent last year, the slowest pace in nearly 30 years, and analysts polled by Reuters expect a further pullback to 6.3 percent in 2019.