Experts say further progress still needed
Overseas companies told the Global Times on Tuesday that they welcome the recent measures taken by the Chinese government to further open up to overseas capital in finance and other sectors, but domestic experts have said that more still needs to be done.
Eugene Qian, chairman of UBS China Strategy Board and member of the Asia Pacific Executive Committee of UBS Group, told the Global Times on Tuesday that the Chinese government's recent decision to open its financial system to overseas capital represents "an important step in further opening China's financial sector."
JPMorgan also said in a statement it sent to the Global Times on Tuesday that it "welcomes any decision made by the Chinese government that looks to liberalize its financial sector further."
Zhu Guangyao, vice finance minister, said at a media briefing on November 10 that China will allow foreign firms to own stakes of up to 51 percent (up from the current 49 percent) in securities, funds or futures companies they have invested in, whether directly or indirectly, in China.
Also, China will completely scrap these ownership limits three years after the new rules become effective, meaning that overseas companies will be able to wholly own such firms in China, Zhu noted.
According to a report by cailianpress.com on November 10, there are currently seven overseas companies, including JPMorgan and UBS, that have set up joint venture (JV) securities companies in the Chinese mainland.
Qian said that UBS will "continue to work toward increasing its stake in UBS Securities Co," its China JV in which it currently holds a stake of 24.99 percent. JPMorgan did not disclose information about its ownership stake.
Besides the financial sector, progress has also been made in opening-up in a more general sense. The National Development and Reform Commission on November 3 sought public feedback about new guidelines for overseas investment management, which would simplify the project declaration process for overseas investors.
Data revealed by China's Ministry of Commerce on November 14 showed that 26,174 new foreign-backed companies were established in China in the first 10 months this year, up 15.9 percent year-on-year. During the same period, up to 56.7 billion yuan worth of overseas capital was spent in high-tech manufacturing industries in China.
Still not open enough
However, some overseas companies have said they still have concerns about doing business in China. For example, a report the German Chamber of Commerce in China sent to the Global Times on Friday noted that many German companies in China have encountered regulatory obstacles in the past year. They are also worried about Internet access restrictions in China.
Xi Junyang, a finance professor at the Shanghai University of Finance and Economics, told the Global Times on Tuesday that China's opening-up scale is still not enough.
"The Chinese government is taking 'orderly' steps to promote opening-up. They want to look before they leap, but that might not satisfy all overseas investors," he said.
For example, in the finance sector, China's opening-up still lags far behind countries like the U.S., where capital is free to enter and withdraw, Xi noted, adding that the Chinese government is mostly worried about possible risks brought by overseas capital, such as abnormal cross-border capital flows.
Zhang Jiayuan, a partner at the Beijing-based Ransenhuizhi Investment Fund Management Co, said that China's opening-up extent is a lot greater compared with several years ago.
"The government needs to first observe the channels and speed of overseas capital's entry into the Chinese market, and then decide the future directions for overseas investment management policies," Zhang noted.
The government should also provide more convenient industrial conditions for overseas companies, she said.
