In the wake of the Chinese Communist Party’s 19th Party Congress, and US President Donald Trump’s visit to China, the Ministry of Finance has announced a high-level roadmap for broadening market access for foreign investors in the financial services industry. This policy development, long under discussion, is part of an effort by the Chinese leadership to bolster deteriorating foreign investor sentiment in the country. Some observers have suggested that the timing of the announcement—immediately after Mr. Trump’s visit—suggests that it is meant to be a kind of gift from Chinese President Xi Jinping to Mr. Trump. Others have surmised that its timing may have been chosen to emphasize that China is committed to opening its markets, but on its own timeline.

Announced on November 10 by Vice Minister of Finance Zhu Guangyao, the roadmap (which was conveyed in oral form, not in the form of a written document) suggests that the Chinese government may fulfill some longstanding requests of foreign investors interested in the industry. According to Mr. Zhu:

  • The current 49% cap on foreign investment in securities companies, securities fund management companies, and futures companies will be raised to 51%; three years after this change, the cap will be lifted altogether, allowing 100% foreign ownership.
  • The current restriction that foreign commercial banks may only own up to 20% of a domestic Chinese bank or financial asset management company (or 25% if there are multiple foreign investors) will be eliminated, allowing for 100% foreign ownership.
  • In three years (the starting point is unclear), foreign investors will be allowed to own up to 51% of life insurance companies (currently, the cap is set at no more than 50%); this cap will be eliminated, allowing for 100% foreign ownership, after five years.

The government’s intent to liberalize market access in the financial services sector does not come as a surprise. Since the beginning of 2017, the State Council has issued multiple notices recommending such changes. The newly announced roadmap appears to be a natural next step in the evolution of this policy.

It is important for foreign investors to keep in mind that this roadmap was a high-level oral announcement, with detailed implementing rules yet to be issued. The timing of and substantive details contained in those implementing rules remain unclear at this time.

For instance, it is possible that China could attempt to use the anticipation surrounding these prospective changes as leverage for negotiating concessions from the U.S., thereby introducing a certain degree of uncertainty. During Mr. Trump’s visit to Beijing, Chinese officials sought lesser scrutiny for Chinese investments in the U.S. (particularly in the high-tech sector), asked for the granting of a financial license for the China International Capital Corporation (“CICC”), and urged “prudence” in the use of trade remedies. With a number of different agencies involved in regulating financial services, internal political factors could also cause delays. Just before the announcement of the new roadmap, a spokesperson for the Ministry of Foreign Affairs said that the easing of market entry barriers would take place “in accordance with China’s own timetable and roadmap.”

The substantive details can also affect the practical benefits of this potential policy change. As government agencies begin to formulate implementation rules, foreign investors are advised to carefully monitor accompanying details such as registered capital requirements, permitted business scopes, application quotas, geographic applicability (e.g., nationwide vs. in free trade zones), anti-trust treatment, rules related to foreign investment in state-owned enterprises, and provisions on the remittance of profits overseas.

Despite uncertainties, the promise of visible progress towards the opening of the financial services sector to greater foreign investment is a significant, positive development for a foreign business community in China that is seeking greater recognition of its contributions to the country’s development and a renewed commitment to continuing China’s long and gradual process of opening its markets.

Eunice Li of Covington & Burling LLP contributed to the research and preparation of this article.

Photo of Ashwin Kaja Ashwin Kaja

With over a decade of experience in China, Ashwin Kaja helps multinational companies, governments, and other clients understand and navigate the complex legal and policy landscape in the country. He plays a leading role in Covington’s China international trade and public policy practices…

With over a decade of experience in China, Ashwin Kaja helps multinational companies, governments, and other clients understand and navigate the complex legal and policy landscape in the country. He plays a leading role in Covington’s China international trade and public policy practices and, outside of Covington, serves as the General Counsel of the American Chamber of Commerce in China.

Ashwin helps clients solve acute problems that arise in the course of doing business in China and position themselves for longer-term success in the country’s rapidly evolving legal and policy environment. He is an expert on Chinese industrial policy and has worked on matters related to a wide range of sectors including technology, financial services, life sciences, and the social sector. Ashwin has also counseled a range of clients on data privacy and cybersecurity-related matters.

As the General Counsel of the American Chamber of Commerce in China (AmCham China), Ashwin serves as a senior officer of the organization and as an ex officio member of its Board of Governors, supporting nearly one thousand member companies in developing their businesses in China and advocating for their needs with China’s central and local governments.

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Photo of Timothy P. Stratford Timothy P. Stratford

Tim Stratford is senior counsel and a member of the firm’s International Trade, Corporate, and Public Policy Practice Groups. He is also serving as Chairman Emeritus of the American Chamber of Commerce in the People’s Republic of China. Tim’s practice is focused on…

Tim Stratford is senior counsel and a member of the firm’s International Trade, Corporate, and Public Policy Practice Groups. He is also serving as Chairman Emeritus of the American Chamber of Commerce in the People’s Republic of China. Tim’s practice is focused on advising international clients doing business in China and assisting Chinese companies seeking to expand their businesses globally. Except for the five years he spent in Washington, DC as Assistant U.S. Trade Representative (2005-2010), Tim lived and worked continuously in the greater China region from 1982-2023, including for twelve years as managing partner of the firm’s Beijing office.

As Assistant USTR, Tim was responsible for developing and implementing U.S. trade policy toward mainland China, Taiwan, Hong Kong, Macao and Mongolia. He worked closely with other senior U.S. and Chinese officials from numerous government departments and agencies to address problems encountered by companies engaged in bilateral trade and investment and co-chaired a number of important bilateral working groups and dialogues established under the U.S.-China Joint Commission on Commerce and Trade and the U.S.-China Strategic & Economic Dialogue.

Prior to serving at USTR, Tim was General Counsel for General Motors’ China operations, where he was a member of GM’s senior management team in China and oversaw the company’s legal and trade policy work. Tim also served previously as Minister-Counselor for Commercial Affairs at the U.S. Embassy in Beijing and as three times as Chairman of the American Chamber of Commerce in China. He is a graduate of Harvard Law School and Brigham Young University, and is fluent in Mandarin and Cantonese.

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