China gave US President Donald Trump a parting gift as he left Beijing today, easing limits on foreign ownership in the financial sector that the United States and Europe have long criticised. The announcement came after Trump capped his first state visit to Beijing by praising the “highly respected” President Xi Jinping as he took off for an Asia-Pacific summit in Vietnam.
During his visit, Trump had called for a more level playing field for American companies and measures to reduce China’s USD 350 billion trade surplus with his country.
As the president left China’s vice finance minister Zhu Guangyao said foreign firms will be allowed to own as much as 51 per cent of shares of tie-ups in securities, funds and futures industries, instead of the current 49 per cent limit, according to the official Xinhua news agency. The limits will be phased out in three years.
Foreign ownership restrictions in Chinese banks and financial asset management firms will also be lifted, Zhu said, as he discussed the “consensus” reached during Trump’s state visit, according to Xinhua.
The US and European Union have long complained about a lack of market access in a host of industries, with foreign firms unable to take a controlling stake in Chinese firms.
In the tightly controlled banking sector overseas companies cannot hold more than 25 per cent of a lender’s capital, making it difficult for them to play any major role in the local market.
“Opening up the financial sector in particular could greatly improve the allocation of financial resources and support China’s future development,” said William Zarit, chairman of the American Chamber of Commerce in China.
“These restrictions, and many others yet to be addressed, have been hindering economic activity in China for far too long.”
But Andrew Polk, a founder of China consulting firm Trivium, said Beijing had merely delayed the move until its own financial institutions were so dominant that they would not be threatened.
“They are finally making good on something they’ve been meaning to do for a long time, so I still don’t see that as real progress on key issues,” Polk told AFP.
Zhu also said Beijing will reduce duties on auto imports “at an appropriate pace”, while Vice Premier Wang Yang said foreign companies will no longer be forced to hand over technology secrets as a condition for entering the Chinese market.
And Wang repeated a pledge in the Communist Party mouthpiece, the People’s Daily, that China will also “strengthen the protection of intellectual property, and strictly crack down illegal and criminal acts such as infringement and counterfeiting”.
During his meetings with Xi yesterday, Trump had urged China to “immediately” take greater action on market access, forced technology transfers and theft of intellectual property.
Xi and Trump oversaw the signing of more than USD 250 billion in business deals yesterday, but analysts downplayed their impact on the trade imbalance, noting many of the agreements were nonbinding and could take years to bear fruit.
Trump showered his host with accolades during his visit.
“My meetings with President Xi Jinping were very productive on both trade and the subject of North Korea,” the US leader wrote on Twitter before leaving.
“He is a highly respected and powerful representative of his people. It was great being with him and Madame Peng Liyuan!” he said, referring to Xi’s wife.
Trump, who has softened his past criticism of China, again lambasted past US administrations for allowing the trade deficit to balloon over the years.
“How can you blame China for taking advantage of people that had no clue? I would’ve done same!”
China was the showpiece of Trump’s five-nation tour of Asia.