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China Continues to Open Up its Securities Sector


In a concession to other nations, particularly the US, China has recently taken even more steps to open up its securities sector. The news is good for global trade and is covered in a recent article by CNBC.

Updates to Foreign Ownership in Chinese Joint Ventures

According to CNBC, the Chinese security regulator has released new rules and guidelines governing foreign joint ownership in Chinese business ventures. The new rules are intended to ease some restrictions on foreign investments. Additionally, the Chinese regulator has launched an application process designed to attract foreign investors and make the process less restrictive than it previously was. The new rules have been released for “immediate implementation”.

The updates are part of China’s ongoing overall process of revising its posture toward foreign investment. Previously, single foreign investors were limited to a 30% stake in any Chinese business venture. Foreign bankers had voiced concerns regarding the 30% restriction, saying it might force non-Chinese investors to include a third business partner in their Chinese ventures. Foreign investors had indicated that needing a third partner was restrictive in that it “Might stymie broadening international participation in China’s domestic securities markets.”

Implications for World Trade and Finance

The move is a big deal for global firms who desire to bolster their business activities in the world’s second-largest economy. The Chinese appear to be paving the way forward.

Trade tensions between China and the US have been high in recent months, as President Trump continues to pursue his “America First” policy with regard to international commerce. As part of the ongoing discussions, the US has repeatedly asked for more access to Chinese markets and business ventures. These developments, outlined by the Chinese security regulator, suggest a move in the right direction, at least from the US Administration’s perspective.