BEIJING: China has unveiled plans to allow more foreign investment in banking, insurance, securities and credit-rating firms, as foreign investors complain of a worsening business environment in the country. The moves could ease frustration among foreign firms over their lack of access, though the guidelines issued yesterday by the National Development and Reform Commission (NDRC) were short on detail. The state planner listed priority sectors for liberalisation but was unclear over the extent and time- frame for the reforms. The focus on liberalising the financial sector should support China’s strategic shift towards services to reduce reliance on traditional industries for growth. NDRC vice-chairman Ning Jizhe told a news conference that the government would maintain “some controls” even after easing curbs on foreign investment, but did not elaborate. “The extent of relaxations for different areas will be different,” the official said.
Other businesses that the NDRC earmarked for opening up in the manufacturing sector included rail transport equipment, motorcycles, edible fats and oils, and fuel ethanol. The NDRC also said China will lift restrictions on foreign investment in unconventional oil and gas production, which usually refers to development of shale deposits. China will seek to open up, in an “orderly way”, sensitive areas such as telecoms, education and the Internet to foreign investment, as well as relax foreign investment restrictions on credit-rating services, the NDRC document said.
Any further opening up to foreign firms should help redress an imbalance in investment flows, as worryingly high capital outflows have been a contributory factor behind the yuan’s depreciation to an 81/2 year low against the United States dollar this year. While Chinese companies, from insurance to property sectors, have expanded overseas at a rapid pace, with overseas acquisitions hitting a record this year, many US and European firms remain frustrated by China’s restrictions on investment. Despite repeated pledges from Beijing to improve access, particularly in the vast financial services sector, some foreign firms became tired of waiting. Some overseas investors in securities and asset management businesses, where foreign ownership is capped at 49 per cent, began to pull out of the sector. Foreign direct investment in China is estimated to reach US$113 billion (S$163.3 billion) this year, China’s Ministry of Commerce said on Monday, lower than the total of US$135.6 billion last year. China ranked 84th globally, behind Saudi Arabia and Ukraine, in the World Bank’s ease of doing business index this year.
