The opening of financial market in China has made continuously great progress in recent years. According to the statistics of the “China Banking and Insurance Regulatory Commission”, a total of 41 corporate banks, 116 branches and 144 representative offices of foreign banks have been established in China by the end of 2020, with total assets of 3780 billion RMB (approx. 472.5 billion EUR). In addition, there are 66 insurance companies, 117 representative offices and 17 insurance agencies established in China by foreign insurance companies with total assets of 1710 billion RMB (approx. 213.8 billion EUR).
According to statistics from the National Banking Association in China, RMB income and expenditure on the cross-border transaction reached total 283,800 billion RMB (approx. 35,475 billion EUR) by the end of 2020. This shows an increase of 44.3% compared to the same period in the previous year.
With an acceleration of the multilateral opening of financial market in China, the investment channel with RMB, such as investing in bond market between banks, RQFII, RQDII, mutual recognition of the fund, Bond Connect etc., will gradually be opened. The 3 largest global bond indices, namely Bloomberg, JPMorgen Chase and FTSE Russell, have already announced that they will include Chinese bonds in the indices.
In order to achieve a higher level of openness of financial market, the Chinese government has issued a number of subsidy policies, e.g. the New Area in Pudong Shanghai which plays an important role in attracting global financial factors. A globally increasing need for capital allocation of the RMB will result in more requirements for risk management, legal environment, human resource requirements.
RQFII: RMB Qualified Foreign Institutional Investors
RQDII: RMB Qualified Domestic Institutional Investors
Source: China Securities Journal