China will continue to encourage strategic foreign investment in the financial services sector in the next five years, according to the country's 11th Five-Year Plan (2006-10) for using foreign investment.
The government welcomes foreign companies to become strategic investors in commercial banks and State-owned insurers, with the Chinese side holding a controlling stake, said the document published by the National Development and Reform Commission (NDRC).
The country will also open up the securities market gradually, allowing foreign investors to make strategic investments in securities companies when reform of the sector is complete, the document said.
China has kept its promise to the World Trade Organization in opening up its financial sector over the past five years.
By the end of last year, 71 foreign banks from 20 countries and regions had set up 238 operating branches in China.
More than a dozen Chinese commercial banks including three of the "big four" State-owned banks have introduced strategic foreign investors.
A total of four joint-venture securities firms and 20 joint-venture fund management companies were established. In addition, the insurance sector has been fully opened with 40 foreign insurers operating in the country, according to the NDRC.
Statistics from the Ministry of Commerce show the financial sector has become a major destination for foreign investment since 2005. Foreign direct investment in the financial sector was around US$12 billion last year, compared with less than US$2 billion in 2004. The figure will continue to jump in the next few years as the sector opens up further.
The NDRC document also encourages foreign investment in other service sectors including telecommunications, retail and logistics, as well as industries such as information technology, petrochemicals, automobiles and infrastructure construction.
From 2001 to 2005, China has received a total of US$383 billion in foreign investment, including US$286 billion in foreign direct investment, US$38 billion in funds raised from overseas listings, and US$46 billion in overseas loans.
(China Daily 11/11/2006 page1)
