In a significant move towards a more integrated global financial system, Chinese financial regulators have introduced a series of measures this year aimed at further opening up the country's financial markets.
A cornerstone of this initiative is the gradual internationalization of the Chinese renminbi (RMB). By optimizing mechanisms such as the Bond Connect and the Cross-Border Interbank Payment System, foreign investors are finding it easier to access Chinese markets, thereby strengthening the RMB's role in global trade and finance.
According to official data, RMB payments accounted for 26.5% of the total value of cross-border trade transactions between January and August, underscoring the currency's growing global significance. SWIFT data also places the RMB as the fourth largest payment currency worldwide, the second largest in trade finance, and third in the International Monetary Fund's Special Drawing Rights currency basket.
China's bond market has surged to become the world's second-largest, with foreign investors holding nearly 4.6 trillion yuan ($628 billion) in Chinese bonds—a new record. Lu Lei, vice governor of the People's Bank of China, highlighted this milestone as evidence of increasing international confidence in China's financial markets.
Foreign financial institutions are also ramping up their presence in China. In May, Belgium's Ageas Group invested 1.075 billion yuan to acquire a 10% stake in Taiping Pension Insurance, a subsidiary of China Taiping Insurance Holdings. This investment taps into the significant growth potential of China's pension market.
Major international insurers, including France's AXA, the US's Prudential, and Italy's Generali, have made strategic investments in China through equity acquisitions and joint ventures. By mid-2024, 67 foreign insurance firms had established operations in China, with foreign insurance assets reaching 2.67 trillion yuan.
Xu Xian, vice president of the Shanghai Insurance Association, emphasized the vast opportunities in China's insurance market, particularly in areas like technology finance, green finance, and digital finance. The removal of foreign ownership limits in key sectors such as banking, securities, and asset management further enhances the prospects for global financial institutions to deepen their roots in China.
Reference(s):
China boosts financial openness, promotes two-way market integration
cgtn.com
