China’s financial sector holds growing appeal for foreign investment

In recent years, China has advanced the opening-up of its financial markets in an orderly manner,
approving the establishment of a total of more than 100 foreign-funded financial institutions in
fields including banking, insurance, securities, and payment and clearing.

In June this year, DBS Securities (China) Limited, China’s first securities joint venture controlled
by a Singaporean-funded enterprise, received its business license from China Securities
Regulatory Commission, thus being permitted to officially commence business operations in

The development of the controlling shareholder of DBS Securities (China) Limited, DBS Bank
(China) Limited (DBS China), which is among the first wholly foreign-owned banks in China, the
first participants in the Cross-Border Interbank Payment System (CIPS) for RMB, and the first
banks designated by Shanghai International Energy Exchange to carry out overseas customer
deposit management business, well reflects the course of opening-up in China’s financial sector.

“Over the past more than four decades, China has established a huge modern financial system, and
its financial sector has enjoyed rapid development. During the course, China has opened up its
markets step by step, achieving universally recognized results,” said Neil Ge, Chief Executive
Officer (CEO) of DBS China, adding that foreign-funded financial institutions have witnessed fast
growth of businesses in China.

China announced that it would significantly broaden access to its financial markets in 2018, and
this round of opening-up surpassed that in 2001 when the country joined the World Trade
Organization in terms of the breadth of licenses for financial services and the depth and speed of
qualifications of businesses, pointed out a report on new opportunities generated by China’s
financial opening-up released by the financial research center of McKinsey Greater China last

China’s importance and influence in the global economy and the global financial systems will
continue to expand, which, combined with the accelerated implementation of the country’s
measures for further opening up its financial markets, will make global investors and market
participants more optimistic about the Chinese market, according to a research team from
Deutsche Bank.

Since the country officially removed all items on the 2020 negative list for foreign investment
access to its financial markets, wholly foreign-owned and foreign-controlled financial institutions
have sprung up all over the Chinese market continuously.

On July 17, 2021, Ueda Yagi Money Broking (China) Co., Ltd., the first wholly foreign-owned
money brokerage company on the Chinese mainland, officially opened for business.

A month before that, BlackRock, the world’s largest asset manager, became the first foreign asset
management company that was licensed to start a wholly owned onshore mutual fund business in
China. On July 1, 2021, BlackRock reported its first public offering product, which meant its first
public offering fund will soon be unveiled.

China’s efforts to implement the Foreign Investment Law and its supporting rules and regulations
and cut the negative list on foreign investment still shorter have created for foreign investors and
foreign-invested enterprises a business environment that is based on market principles, governed
by law and up to international standards, which impressed Tomoyuki Ota, chief economist at

Japan’s megabank Mizuho Financial Group.

The law helps foreign-invested companies develop better in China and enables Chinese people to
enjoy better services, said Ota, who believes that the continuous efforts of China to further open
its financial markets are beneficial to both China and the world.

Financial opening-up signals the elevation of China’s opening-up to a higher level, and reflects
further integration of the Chinese economic development into the global market, according to
Wang Yifeng, an analyst with China Everbright Bank.

Speeding up opening-up helps China introduce new management experience, product system, and
risk management techniques, and improve the capacity of China’s financial sector for serving the
real economy, Wang said.

While expanding opening-up of the financial sector, China needs to enhance its risk prevention
ability, strengthen macro prudential management, and make financial regulation more professional
and effective, Wang added.

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