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Banking & Finance

China expands access to financial markets with 11-point plan

Latest measures open up bond market in hopes of advancing US trade talks

Shanghai's financial district of Pudong: Foreign banks have been eager for a piece of China's lucrative bond underwriting business.   © Reuters

BEIJING -- China will expand the role of foreign credit rating agencies and brokerages in the bond market under new measures meant to free up markets in financial services, the central bank said Saturday.

The 11-point liberalization plan allows S&P Global to rate all bonds traded on local securities markets, expanding on a move in January that allowed the U.S.-based company to rate bonds in China's interbank market.

The measures come as China and the U.S. have yet to resume face-to-face trade talks despite agreeing last month to restart negotiations. The U.S. has pushed for greater access to China's financial markets.

Foreign brokerages will also be allowed to serve as lead underwriters for bond offerings in the interbank market. Foreign banks have been eager to enter this business in China, where profit margins are high.

The reforms also pave the way for foreign financial institutions to participate more in the country’s asset management, pension management and currency brokerage sectors.

A requirement that foreign insurers must be in business for over 30 years to enter the Chinese market was removed.

With rising imports and falling savings expected to put pressure on China's current-account balance, Beijing appears to be opening the country to wider foreign capital by freeing up its bond and asset management markets. 

Hu Xijin, editor of China's Global Times newspaper, predicted on his closely watched Twitter feed that face-to-face trade talks "will not be far away" following a telephone conference Thursday between officials from both sides.

"I think we can expect that some actions may happen, which would be seen as goodwill from each other['s perspective]," Hu wrote.

Saturday's reforms are the latest measures to open up markets since Chinese Premier Li Keqiang said on July 2 that China will allow majority foreign ownership of securities and life insurance companies in 2020, a year earlier than originally planned.

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