China is opening its financial doors wider to the world, making moves that could change global markets in a big way.
This year, China’s financial leaders have introduced new measures to make it easier for foreign investors to access Chinese markets. They’re aiming to create a more connected, two-way financial system. A big part of this plan is to promote the use of the renminbi (RMB), China’s currency, around the world.
To support this, China has improved systems like the Bond Connect and the Cross-Border Interbank Payment System. These changes make investing in China smoother for outsiders and boost the RMB’s role in international trade and finance.
Between January and August, RMB payments made up 26.5% of all cross-border trade transactions. This shows more people globally are using China’s currency. In fact, data from SWIFT, a global financial messaging service, shows the RMB is now the fourth most used payment currency worldwide and ranks high in international finance.
China’s bond market is also booming. It’s now the world’s second-largest, with foreign investors holding nearly 4.6 trillion yuan ($628 billion) in Chinese bonds—a record high, according to Lu Lei, vice governor of the People’s Bank of China.
Foreign financial companies are also keen to be part of China’s growth. In May, Belgium’s Ageas Group invested over a billion yuan to buy a 10% stake in Taiping Pension Insurance. They see big potential in China’s pension market. Other major international insurers like France’s AXA, the U.S.’s Prudential, and Italy’s Generali are also investing through partnerships and joint ventures.
By the end of June 2024, 67 foreign insurance firms had started operations in China, with assets totaling 2.67 trillion yuan, according to China’s National Financial Regulatory Administration.
Xu Xian, vice president of the Shanghai Insurance Association, said China’s insurance market offers huge opportunities for foreign investors. “Foreign capital will play a crucial role in the country’s high-quality financial development, especially in areas like technology finance, green finance, inclusive finance, pension finance, and digital finance,” Xu told China Central Television.
China has also lifted foreign ownership limits in key sectors like banking, securities, insurance, asset management, and futures. This means global financial institutions have more chances than ever to be part of China’s growing market.
Reference(s):
China boosts financial openness, promotes two-way market integration
cgtn.com
