As China Liberalizes Financial Sector, It Seeks ‘Better Treatment’ Abroad

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People’s Bank of China Governor Zhou Xiaochuan said the country is preparing to further open its financial sector, and that doing so will involve negotiations over how other nations treat Chinese investors.

Areas of potential liberalization include banking, insurance, investment banking, securities firms, and payment systems, Zhou told a gathering of Asian leaders Sunday during a panel talk at the Boao Forum for Asia on the southern Chinese island of Hainan. Foreign financial companies are mostly banned from doing business in China except in partnerships with domestic entities.

“Sometimes it’s a negotiation process,” Zhou said at the annual conference. “China would like to see that when we open wider in the financial sector, whether we can access some things. China is very interested to see that Chinese investors, especially private investors, should get better treatment overseas in other countries.”

Global trade was the central theme for officials and executives at this year’s forum, with Zhou saying Saturday he wanted Group of 20 leaders to seek greater consensus on the issue when they meet later this year. The central banker for the world’s largest trading nation listed the many trade discussions the country is involved in, including talks with Europe, Japan, the 16-nation Regional Comprehensive Economic Partnership in Asia, and the U.S. over a bilateral investment treaty.

Negotiation Path

“There’s a path of negotiation and we’re waiting for the U.S. and the new administration to decide how we would like to push this forward,” Zhou said, noting that the final responsibility belonged to the Ministry of Commerce and the National Development and Reform Commission. “We still have active talks with the Europeans, with Japan, with Asean countries, so I hope these things can continue and reach a positive result.”

China released plans to ease restrictions on overseas investment in banking, securities, futures, mutual funds and insurance in January, including steps to allow foreign-invested, locally incorporated firms to issue stock and debt.

Vice Premier Zhang Gaoli told the gathering Saturday that RCEP negotiations should be concluded soon and cooperation within the region, including with the Association of South East Asian Nations, should be advanced. The world must commit to multilateral free trade under the World Trade Organization and reform global economic governance, he said.

Zhou referred to China’s efforts to buy non-military high technology when discussing its treatment by other countries. “It’s dependent on the negotiation, and each side may make a kind of compromise that makes globalization go forward and everyone can benefit,” he said. Chinese officials in the past have expressed concern that U.S. security reviews could become a barrier to investment.

China is looking to introduce a more precise national treatment for foreign investors, Zhou said, adding that “the private sector, public sector, and state-owned enterprises, should have equal access.”

Bilateral investment treaty talks have made “a lot of progress,” former U.S. Trade Representative Michael Froman said in a Bloomberg Television interview from Boao. He said the Chinese are “very tough negotiators” and want to find a way to work well with the U.S.

The four-day Boao Forum concluded Sunday with the release of a declaration that globalization has underpinned economic growth and reduced poverty worldwide, but also causes problems that should be addressed. It said protectionism should be rejected, echoing Chinese President Xi Jinping’s January speech to the World Economic Forum in Davos.

“Pressures on global growth and the increase in de-globalization and trade protectionist rhetoric and actions have caused serious concerns about possible disruptions to global trade and growth,” members said. “Asian countries should stay committed to the course of open markets, inclusive growth and continued economic cooperation to ensure shared prosperity.”