Chinanews, Beijing, Sept. 30 – Yi Xianrong, director of the Finance Development Research Office under the Finance Institute of the Chinese Academy of Social Sciences recently published an article in the overseas edition of the People’s Daily, in which Li says that China should take a gradual approach in fully opening its finance sector.
According to Yi, full opening of the finance sector is the basis for Chinese finance industry to further grow and develop. It is also a prerequisite for Chinese finance industry to be integrated into the world finance globalization. However, the condition for China to open its finance sector is different from those in Japan and South Korea, which were forced to open their finance industries under domestic financial crisis. China actively opens its finance industry as a way to realize its commitment to the World Trade Organization (WTO). Therefore the process will be gradual, orderly and carefully planned, instead of being prompted by external factors.
He points out that by opening the finance sector, China expects to introduce some advanced ideas, managing experiences, risk control mechanism, institutions and products to boost a market-oriented economy, promote competition and reduce systematic risks. At the same time, China hopes to avoid the potential negative effects brought by this process, so as to create a favorable environment for domestic finance sector to further develop.
In his opinion, the regulation on the management of foreign banks, recently published by the China Banking Regulatory Commission, can serve as an example to demonstrate such steady opening. While fully respecting China’s commitment to WTO, the new regulation stipulates some strategic restrictions, requiring that foreign banks only register as a legal entity before they can launch Renminbi business in China. China is not the first country to set these limitations. Rather, they are adopted as usual practice by many countries which have advanced market economy. While not violating China’s commitment to WTO, the restrictions will create a favorable condition for the development and supervision of domestic finance industry.