July 20, 2019 / 8:32 AM / 3 months ago

China to scrap foreign ownership caps for life insurers earlier than expected

SHANGHAI (Reuters) - China will remove foreign ownership caps for life insurers, securities firms and funding houses by 2020, a year earlier than scheduled, the top financial watchdog said on Saturday.

According to a statement from the State Council Financial Stability and Development Commission published by the central bank, China will encourage foreign companies to set up or take stakes in money brokerage firms and allow foreign investors to hold more than 25% stakes in insurance asset management firms.

The opening up of its financial sector is a key part of Beijing’s efforts to resolve a trade war with the United States. Washington has accused China of limiting market access for U.S. firms, forcing companies to transfer technology and providing little protection for intellectual property rights.

China’s financial stability commission said it was operating on the principle of “sooner rather than later” when it comes to relaxing restrictions on foreign institutions.

The People’s Bank of China also said it would permit foreign-invested agencies to give ratings to all forms of interbank market and exchange-traded bonds.

It added that it would even let more qualified foreign-invested rating institutions develop credit-rating businesses for the interbank market and exchange-traded bonds, and allow them to receive Type A lead underwriting permits.

The financial stability commission, chaired by China Vice Premier Liu He, convened on Friday to discuss the course of financial reform in the first half of the year.

“At present and in the next period, international and domestic trends are complex and there are many risks and challenges to the stable operations of the domestic economy and financial system,” it said.

It promised to continue to implement a sound monetary policy and carry out countercyclical adjustments in order to maintain sufficient liquidity in the market.

Reporting by David Stanway and Andrew Galbraith in SHANGHAI, Leng Cheng in BEIJING; Editing by Nick Macfie and Himani Sarkar

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