China is to lift the 20 percent ceiling on foreign ownership of Chinese banks and financial asset management companies and a 25 percent limit on total holdings, said Zhu Guangyao, vice minister of the Ministry of Finance at the briefing on economic outcomes from the meetings between Chinese and the U.S. leaders in Beijing.

Zhu introduced at the briefing that China's reform and opening-up connects China's economy increasingly close to the world. As a result, China's economic development contributes to and in return benefits from the world's economic advancement.

Over the past several years, the opening-up in China's financial industry has been steadily progressed. Liu Tao, deputy director of institution of strategic studies of Jiangxi Bank, said to NBD that to lift the foreign ownership ceilings is beneficial for Chinese financial institutions to attract strategic investors and bring in expertise of world's leading financial institutions in management and operation, so as to develop better and bigger and to accelerate their transformation.

E Zhihuan, Chief economist at Bank of China (Hong Kong) echoed Liu's opinion, saying that to ease the limits on foreign financial companies and to increase the foreign ownership ratio in Chinese-funded banks will offer bigger development space for foreign banks and financial institutions.

Li Honghan, a researcher with the International Monetary Institute of Renmin University of China, explained to NBD the logics behind such favorable policy as follows:

First, internationalization of RMB has entered its critical stage in China, the second largest economy across the world. With the steady progress of the Belt and Road Initiative, to open up China's financial industry will become the necessary condition to achieve RMB internationalization and the prerequisite to produce a win-win result where China's financial industry reaches out and foreign financial institutions come in.

Second, this move is to fulfill China's commitment made at its accession into the World Trade Organization. China's economy now has equipped with the basic strengths to confront external economic fluctuation, which constitutes as a good timing to open up its financial industry in an all-round way.

Third, this step shows China's confidence in its economy and finance. It was reported that as of the end of 2017 Q3, the asset balance of China's banking financial institutions stood at around 200 trillion yuan (30.1 trillion U.S. yuan) and Chinese banks made up a quarter of world's top 100 banks. In addition, as of the end of 2017 Q3, the non-performing loan ratio of China's banking industry was approximately 1.8 percent,3 percent lower than that of the global banking industry reported by the World Bank.

Email: gaohan@nbd.com.cn