In November 2017, China announced an unprecedented reform to its financial sector whereby foreign ownership limits in the sector will be phased out. In April 2018, more details of the reform as well as their implementation timelines were published.
The reform is the most significant break-through in recent years in China’s Reform and Opening policy. Foreign investors will now be able to take controlling stakes in Chinese financial institutions and therefore have greater control of their investments in China. Furthermore, Foreign investors will also be treated exactly the same way as Chinese investors.
The reform will take place across all sub-sectors in the financial sector. International financial conglomerates will be able to engage in cross- sectoral businesses and have more opportunities to take part in and benefit from the rapid growth of China’s financial sector and economy as a whole in the light of China’s burgeoning middle-class and aging population.
The benefits to both the investors and the Chinese market are significant. Foreign investors will bring to the Chinese financial institutions management expertise, product innovation, new technology, and advanced business models, and hence drive the development of those companies, which will, in turn, bring significant returns to the investors.
Greater foreign ownership in China’s financial sector will bring in greater market competition, enhance the market efficiency, promote a more robust financial sector and further China’s financial stability, all of which will ensure the continued returns on the investments.
Our lawyers, in both our China and London offices, have an in-depth understanding of the market conditions and legal frameworks of China’s financial sectors and are geared for helping businesses wishing to invest in China. We have extensive experience in advising clients on a wide range of complex cross-border transactions including foreign direct investments, mergers and acquisitions as well as banking and finance. Through our local partners, our services will also cover Chinese law regulatory, compliance and licensing issues affecting those doing business in China.
We have been monitoring this development closely and are ready to assist companies wishing to invest into Chinese financial institutions and insurance companies. We will provide regular legal updates as this market develops and evolves.
We will regularly update this page with relevant articles.
To find out more, please contact Fei Mao.