DALIAN -- China's financial reform and opening up has been drawing wide attention. China's central bank governor Zhou Xiaochuan recently stressed China should further accelerate opening up its financial market, followed by the inclusion of the A-share into Morgan Stanley's Capital Index (MSCI) global benchmarks marking China made anther step to be connected with global market.
At a forum on Global Implications of China's Financial Reform during the Annual Meeting of the New Champions 2017, also known as Summer Davos, attending experts agreed that it's still a good time for China's financial market to speed up opening up, including opening up of capital market and financial service sector.
Li Daokui, an economist at Tsinghua University, said that opening up of financial sector is different from that of manufacturing industry, which largely means opening up of products.
For financial sector, the opening-up has two aspects, the first one is whether foreign investment in China's enterprises, investment banks, or securities firms are allowed or not, or whether the service market is open.
Li believed China is quite open in the aspect of financial services as China Banking Regulatory Commission issued a regulation a decade ago saying that establishing banks in China must introduce strategic foreign investors to hold at least 10 percent stake.
The other aspect is that if the capital flow is liberated. "China should be prudent on this aspect, because it's is hard for the outside world to correctly interpret China's economy, which may cause large fluctuations in capital flows" said Li.
Bohai Bank president Li Fu'an said "China's financial industry has been benefited from opening up." He witnessed the demonstration effect brought by foreign banks to China during the two decades when he served in China's banking regulating bodies. He said the slow development of foreign banks in China was largely affected by the financial crisis.
In his opinion, China needs to further open its financial market to the world and learn "something good" in the next phase. "Currently, China's banks are all in very large scale, but in innovation, sophistication and corporate management, they are still far behind and need to transform or be weeded out though opening up the market," said the banker.
Li Jing, JP Morgan managing director and vice chairman of Asia Pacific, said China also pursued a path of globalization of Chinese currency, but China's capital market is still relatively closed to global investors, so it's very heartening to see MSCI, the major global index, has included China a-shares for the very first time in its global indices.
Zhou has cited the success of China's manufacturing industry in the past many years is because of opening to the outside world. China's manufacturing sector has become quite globally competitive, now it's the financial sector's turn to open itself up to the global competition, so the recent MSCI inclusion of a-shares in its global indices is a relative symbolic move, she said.
Moreover, opening of the bond market is also part of the opening of the financial market. On June 21, China's central bank issued rules on overseas investment in the Chinese mainland interbank bond market via the mainland-Hong Kong bond connect program and the bond connect program between the Chinese mainland and Hong Kong will officially start operation soon.
Experts believed the stock and bond connect program between the Chinese mainland and Hong Kong both have accelerated the process of the opening up of China's financial industry.
Eswar Prasad, a professor at Cornell University, also suggested that China should still focus on fundamentals of its economy and improve relevant mechanisms during the process of capital market opening up.
(Contributed by Yang Qi, Duan Jing & Zhang Yifei, kateqiyang@xinhua.org)
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