Global Geopolitical Series: PBoC signals speedy reforms after President Xi’s concession speech

After Chinese President Xi Jinping signaled concessions in the current trade dispute between the United States and China during his speech at the Boao forum in Asia, which is popularly called as the ‘Davos of Asia’, People’s Bank of China (PBoC) indicated speeding up of reforms. Xi promised to open up the Chinese economy faster, promised to reduce trade tariffs on items such as imported cars, promised to protect foreign intellectual properties from theft, and create an environment that improves investments for international companies. Here are some key comments from Xi,

“China does not seek trade surplus. We have a genuine desire to increase imports and achieve greater balance of international payments under the current account…… We must refrain from seeking dominance and reject the zero-sum game, we must refrain from 'beggar thy neighbor' and reject power politics or hegemony while the strong bully the weak” and called on countries to “stay committed to openness, connectivity and mutual benefits, build an open global economy, and reinforce cooperation within the G-20, APEC and other multilateral frameworks. We should promote trade and investment liberalization and facilitation, support the multilateral trading system. This way, we will make economic globalization, more open, inclusive, balanced and beneficial to all". He further added, “We encourage normal technological exchanges and cooperation between Chinese and foreign enterprises and protect the lawful [intellectual property] owned by foreign enterprises in China".

After these comments, PBoC signaled that it has sped up the pace of ownership reforms for China’s banking, securities, futures, asset management and insurance sectors, shifting the timeline for implementation from years to just months. Yi Gang, governor of the People’s Bank of China (PBoC), said at the Bo’ao Forum for Asia on Wednesday that within a few months it would erase limits on foreign companies’ ownership of local banks and asset management companies as well as permit foreign banks to set up local branches within China, treating foreign and local investment in the same way.

Mr. Yi also said China would raise limits on foreign ownership for securities, futures and insurance companies to 51 percent in the coming months, with that cap to be removed entirely after three years.