BEIJING -- The Chinese government said Friday it will open its financial sector to foreign companies, a move aimed at spurring modernization of the domestic industry through the greater presence of foreign companies.
The new rules will allow full foreign ownership of local securities companies in 2020, and of insurance companies in 2022. Foreign banks will be able to acquire local banks. Currently, China does not allow foreign majority ownership of companies in these sectors.
The announcement was timed for a visit to China by U.S. President Donald Trump, who has been calling for greater market access for U.S. companies.
Chinese President Xi Jinping explained the move to Trump during their talks in Beijing on Thursday. The new rules will apply to all foreign financial institutions, including those from Europe and Japan.
Under current rules, foreign firms can operate securities or life-insurance services only through joint ventures, with foreign ownership capped at 49% for securities services, and 50% for life-insurance services.
The limit will be raised to 51% as early as this year for securities businesses and removed entirely in 2020. For life-insurance services, the cap will be raised to 51% in 2020 and removed entirely in 2022.
Banks are already allowed to operate wholly owned subsidiaries in China. Under the new rules, the cap will be raised on foreign ownership of local banks. Currently, foreign banks can only have a 25% stake in local banks.
It is not clear whether the liberalization will actually result in more foreign-owned brokerages and insurers in China, as regulatory approval is still needed to establish local companies. How Chinese regulators apply the new rules to foreign firms is not yet clear.