First, the current progress of China's financial industry opening to the outside world
(1) Foreign-funded financial institutions have become an indispensable part of China's financial system.
1, bank
Since China joined the WTO, the proportion of foreign banks in the total assets of China's banking industry showed a downward trend in 2002-2003, with unstable profitability, outstanding credit risk and shrinking branches. However, the proportion of total assets in China's banking industry has steadily increased, the non-performing loan ratio has steadily decreased, and the number of operating institutions has increased rapidly (Figure 1, Figure 2).
On the whole, foreign banks have shown a steady development trend, active business operations and improved profitability. In the credit market, the growth rate of RMB and foreign exchange deposits and loans is relatively fast. In recent two years, the market share has gradually increased, and the non-performing loan ratio has gradually decreased. Especially in some cities with high openness, such as Shanghai, the proportion of foreign exchange loans has reached 54.8%, and the total assets of RMB business have increased by 253.6% in five years. In terms of business development, within the stipulated basic business scope of 65,438+02, foreign banks have more than 65,438+000 types of business, especially in syndicated loans, trade financing, retail business, fund management and derivative products.
2. Insurance industry
Comparing with different fields, China insurance industry is the most open industry in China. By June 65438+February 65438+February 0, 2004, the insurance industry in China was fully open to foreign investment, and the geographical restrictions and business scope restrictions on foreign investment were cancelled. Chinese and foreign insurance companies basically compete on the same platform, so the insurance industry has become the most competitive financial market under the impetus of opening up.
In 2005, the premium income of Chinese insurance companies increased by 8.52% year-on-year, and that of foreign insurance companies increased by 248.45% year-on-year, which was significantly higher than the growth rate of Chinese insurance companies in the same period. In terms of market share, life insurance premiums and property insurance premiums of foreign insurance companies accounted for 8.9% and 1.3% of the national premium income in 2005, respectively, up by 6.3 and 0. 1 percentage point over the previous year (see Figures 5 and 6). In regional insurance markets where foreign companies are relatively concentrated, such as Beijing and Shanghai, foreign insurance companies have a higher market share.
3. Securities industry
Due to the reform of China's capital market and the restrictions on the convertibility of RMB capital account, China is relatively cautious in opening its securities industry. Up to now, seven Sino-foreign joint venture securities companies, including CICC, BOC International, Huaou International, Baifuqin, Daiwa, Goldman Sachs Gaohua and UBS Beizheng, have been approved to be established. Compared with the cautious opening of the securities industry, the establishment of joint venture fund companies has become a bright spot in the securities market. Since the first foreign fund management company, Guoan Fund Management Company, was approved for construction in June 5438+October 2002 10, in two and a half years, China Securities Regulatory Commission has approved 22 Sino-foreign joint venture fund management companies, far exceeding the number of joint venture securities companies. With its brand advantages, technical capabilities, global network and financial strength, joint venture fund companies are becoming an important force among institutional investors in China stock market.
In addition, China officially launched the Qualified Foreign Institutional Investor (QFII) system at the end of 2002, which provided an opportunity for foreign investors to directly participate in the China A-share market. On July 9th, 2003, Swiss bank completed the first QFII instruction, and QFII officially entered China A-share market. As of June 27th, 10, * * 5 1 overseas institutions have obtained QFII qualifications, with a total of 65,433 QFIIs.
(B) The forms of foreign financial institutions participating in China's financial industry tend to be diversified.
From the perspective of investment forms, with the improvement of the openness of the financial industry, on the one hand, the modes of foreign capital participating in the domestic market are increasingly diversified. In addition to setting up branches, forms such as joint venture, sole proprietorship and equity participation are increasingly adopted by foreign financial institutions. On the other hand, as early as the end of 200 1, the domestic banking industry set off an upsurge of foreign financial institutions participating in Chinese banks. Subsequently, under the guidance of specific market environment and policies, foreign participation in Chinese-funded institutions became the first choice for large foreign-funded financial groups to enter China. Especially in 2003, China Banking Regulatory Commission promulgated the Measures for the Administration of Foreign Financial Institutions Investing in Chinese Financial Institutions, which created a good regulatory environment for foreign participation, and its huge market potential attracted many foreign financial institutions to join this special M&A market.
By the end of June 2006, 26 overseas financial institutions had invested 18 Chinese banks with a total amount of1790 million USD. There are 22 foreign insurance companies, 23 joint venture fund management companies and 8 joint venture securities companies (see attached table). The scope of foreign-funded financial institutions' choice of shareholding targets has been expanded. In addition to city commercial banks and joint-stock commercial banks, state-owned banks can also choose to participate in shares.
(3) The supervision of foreign-funded financial institutions is gradually in line with international standards.
At present, China implements the supervision mode of separate supervision, that is, the financial industry is supervised by "one line and three meetings" (People's Bank of China, China Banking Regulatory Commission, China Securities Regulatory Commission and China Insurance Regulatory Commission). Among them, the China Banking Regulatory Commission (CBRC) uniformly supervises the national banks, financial asset management companies, trust and investment companies and other deposit-taking financial institutions, the China Securities Regulatory Commission uniformly supervises the national securities and futures market, and the China Insurance Regulatory Commission uniformly supervises the national insurance market.
During the transitional period, China has made many revisions and supplements to the existing laws and regulations system according to its WTO commitments and the development reality of foreign banks. In banking, the Regulations of People's Republic of China (PRC) on the Administration of Foreign-funded Financial Institutions has been revised twice since it was issued on February 25th. 1994. In particular, the Detailed Rules for the Implementation of the Regulations on the Administration of Foreign-funded Financial Institutions in People's Republic of China (PRC), which came into effect on September 1 2004, further highlighted the principle of prudential supervision under the original framework, simplified the examination and approval procedures, and adapted to the regulatory requirements of Chinese capital as much as possible in accordance with international practice. Therefore, this provision has become the most important basis for the supervision of foreign-funded financial institutions in China at this stage. Since 2006, the Administrative Measures for Overseas Financial Institutions to Invest in Shares in Chinese-funded Financial Institutions, the Administrative Measures for Consolidated Supervision of Foreign Banks, the Interim Measures for the Administration of Derivatives Trading of Financial Institutions, the Administrative Measures for Auto Finance Companies and the Implementation Measures for Administrative Licensing of Foreign-funded Financial Institutions have formed a legal system for effective supervision of foreign banks. In the securities industry, the Rules for the Establishment of Foreign-Share Securities Companies and the Rules for the Establishment of Foreign-Share Fund Management Companies were promulgated and implemented in 2002. In September 2006, the Measures for the Administration of Domestic Securities Investment by Qualified Foreign Institutional Investors and the newly revised Securities Law became the main basis for the supervision of financial institutions of foreign-share securities funds. In the insurance industry, the regulations mainly aimed at the supervision of foreign capital are the Regulations on the Administration of Foreign-funded Insurance Companies in People's Republic of China (PRC) and the Regulations on the Administration of Foreign-funded Insurance Companies.
At the same time, with the promotion of opening to the outside world and the diversification of regulatory targets, China's regulatory technical standards have been continuously improved. After China's entry into the WTO, China's financial supervision authorities will shift the supervision of foreign-funded financial institutions from the previous over-emphasis on market access to the supervision of market operations, and seek to establish a set of standardized operating procedures that meet international standards. For example, in terms of banking supervision, China follows international practice, and the CBRC and its dispatched offices will implement consolidated supervision of foreign banks. Manage the risk and capital adequacy ratio of foreign bank branches. At present, China Banking Regulatory Commission has established ROCA evaluation system and consolidated risk evaluation system for foreign banks' branches in China, evaluated the merger of branches, comprehensively evaluated the head office and its global business security, and issued three different types of business licenses to foreign banks according to the evaluation results, including off-site inspection and on-site inspection. At the same time, the regulatory authorities have strengthened communication and coordination, and strengthened information transmission between regulatory authorities by signing memorandums and joint regulatory meetings. In addition, China also attaches importance to the international coordination role of foreign bank supervision and strengthens international cooperation in foreign bank supervision.
Second, the policy orientation of foreign-funded financial institutions in various fields in the late transition period.
(1) Banking
1, the commitment of the banking industry to open to the outside world
According to the relevant agreements of WTO, China will gradually cancel the protection measures for the "commercial presence" of foreign banks, that is, cancel the geographical restrictions on foreign banks to operate RMB business, that is, expand from the 25 cities currently open to the whole country; Cancel the restrictions on RMB business objects of foreign banks and open RMB business for domestic residents to foreign banks; Cancel the imprudent measures that restrict the existing ownership, operation mode and legal form of foreign-funded financial institutions.
2. Policy priorities
(1) company-oriented policy
China is revising the Regulations on the Administration of Foreign Banks in People's Republic of China (PRC), which is expected to be officially promulgated in June+February, 5438. The first draft of the regulation clearly points out that "in order to meet the needs of the development of foreign banks' institutions and businesses in China, the positioning of local registered corporate banks should be implemented on the premise of allowing foreign banks to freely choose their business forms in China. "The first draft of this regulation clearly stated that different policies should be implemented for corporate banks and foreign banks. (2) Corporate banks are allowed to engage in bank card business, and branches of foreign banks cannot issue credit cards due to unincorporated entities; ③ The registered capital and working capital requirements of corporate banks and their branches [FS:PAGE] are consistent with those of Chinese banks, and the RMB working capital adequacy ratio of branches of foreign banks will continue to be assessed separately.
Although the regulation has not been officially promulgated, the legal person-oriented supervision policy has become the main tone of China banking supervision of foreign banks in the era of full opening. For foreign financial institutions, the establishment of independent legal institutions means that they must accept the same strict supervision as Chinese banks. According to some specific requirements for bank operation stipulated in the current commercial banking law, such as loan-to-deposit ratio rate, foreign debt quota, interbank lending quota, capital adequacy ratio, etc., for example, according to domestic regulatory requirements, the loan-to-deposit ratio rate of Chinese banks should not be higher than 75%, while the current loan-to-deposit ratio average of foreign banks is 46%. In addition, the establishment of a legal person institution will increase the cost of foreign financial institutions to a certain extent. According to the requirements of the first draft of the regulations, the registered capital of a legal person is 654.38+0 billion yuan. The working capital of the branches under the branch is 6,543.8 billion yuan, and the capital adequacy ratio is assessed in both local and foreign currencies. For foreign financial institutions, capital increase is a complicated procedure.
(2) Renminbi business
It is pointed out in the first draft of the Regulations on the Administration of Foreign Banks that China will open the RMB retail business before the end of 2006 as promised, but this does not mean that all foreign banks that are allowed to operate RMB business of Chinese-funded enterprises can automatically obtain RMB business licenses. For a corporate bank, in order to allow it to engage in all RMB business, its head office still needs to meet the conditions of "being in business for three years and making profits for two consecutive years" for the first time, and its branches can be authorized within the business scope approved by the head office and meet the business outlets. As for branches of foreign banks, in order to carry out RMB business, they need to meet the conditions of "having been in business for three years and making profits for two consecutive years", and they also need the approval of a single bank. In addition, the sources of RMB funds of foreign bank branches are expanded, allowing them to absorb time deposits of China residents exceeding 1 10,000 yuan.
Judging from the current policy trend, it will take some time for foreign financial institutions to prepare for large-scale RMB business, and a certain threshold will be set. The CBRC also suggested making full use of WTO rules and the principle of prudence allowed, and setting prudent conditions for opening the RMB business of China residents to foreign banks, so as to protect the interests of depositors and safeguard the security of the financial system. Every country has corresponding restrictions on the retail business of foreign banks. For example, in the United States, most branches of foreign banks can only absorb deposits of more than $654.38 million and engage in wholesale business. To engage in retail business in the United States, foreign banks must first join the federal deposit insurance and must be corporate banks.
Before the implementation of the company-oriented policy, the substantial risk of foreign banks often lies in the parent bank. Once it becomes an independent legal entity in China, the parent bank has no other responsibilities and obligations except providing registered capital. If a bank encounters an operational crisis, local depositors will bear the consequences. In the absence of China's current deposit insurance system, raising the deposit threshold of foreign banks is conducive to preventing financial risks, which is compatible with China's national conditions and does not contradict the principle of opening up.
(3) restrictions on the proportion of shares invested in Chinese banks
According to the current regulations, the shareholding ratio of a single foreign-funded institution in a Chinese bank shall not exceed 20%, and the total shareholding ratio in a Chinese bank shall not exceed 25%. Of course, the 25% ceiling is only for unlisted banks, and listed banks are not subject to this restriction.
Because there is no stipulation in the WTO commitment, there is no clear statement about when to release foreign capital to the upper limit of shareholding of unlisted banks. Judging from the current situation, China government will firmly maintain absolute control over state-owned commercial banks such as China Industrial and Commercial Bank, China Agricultural Bank, China Construction Bank, China Bank and Bank of Communications, and it is affordable to relax the shareholding ratio of other types of commercial banks to some extent. However, referring to international experience, the China government may still limit the proportion of foreign capital in domestic banks.
(2) Securities industry
1, the commitment of the securities industry to open to the outside world
According to relevant agreements, the opening of China's securities industry includes the following contents: (1) Foreign-funded securities institutions are allowed to directly engage in B-share trading, and Chinese-foreign joint venture securities companies are allowed to underwrite A-shares, B-shares and H-shares as well as government and corporate bonds within three years after China's accession, with the proportion of foreign investment not exceeding 1/3. (2) Chinese-foreign joint venture fund management companies are allowed to be established, with the proportion of foreign capital not exceeding 33.
2. Policy priorities
(1) establishment of joint venture securities company
At present, China does not allow foreign investors to operate through the establishment of wholly-owned securities institutions, so the establishment of Sino-foreign joint venture securities companies has become the main way for foreign investors to enter the securities industry through [FS:PAGE]. Up to now, seven Sino-foreign joint venture securities companies, including CICC, BOC International, Huaou International, Peregrine, Haidahe, Goldman Sachs Gaohua and UBS North Securities, have been approved, but UBS's plan to restructure North Securities was approved in September 2005.
As can be seen from the time schedule, since the China Securities Regulatory Commission began to implement the comprehensive management policy of securities companies in July 2005, in order to prevent some securities companies with poor quality and high risks from evading their responsibilities through joint ventures, they have stopped approving new securities companies and setting up joint venture securities companies. Judging from the current situation, after the comprehensive management of securities companies was basically completed at the end of 2007 10, China reopened the examination and approval of joint venture securities companies. However, in the latter transitional period, the opening of China's securities industry will still be carried out according to the development process of China's securities market and the governance and operation of China's securities companies. China's securities market still has obvious characteristics of "emerging and transition". Although the share-trading reform has come to an end, the construction of many basic systems is still in progress. The process of standardization and marketization should precede internationalization, and the process of internationalization should also follow the principle of gradual progress.
(2) Trading and buying and selling A shares
China has not promised to open the A-share market. There are three main ways for foreign capital to enter the A-share market: first, QFII, that is, the system of qualified institutional investors abroad; The second is to allow foreign investors as strategic investors to directly invest in the A-share market after the share-trading reform. It can be seen that due to the development of China's capital market and the process of capital account convertibility, the opening of China's A-share market will still be a gradual process, and these paths will remain the main channels for foreign investors to intervene in the A-share market for some time.