FINANCIALS:CHINA OPENS UP MARKET ACCESS FOR FOREIGN BANKS AND INSURERS
The State Council revised regulations on foreign banks and insurers, relaxing market access rules for foreign banks and insurers.
The revision allows foreign banks to set up branches as well as wholly foreign-owned banks, branches, and domestic-foreign JV banks. The threshold of fixed-term RMB deposits is also lowered from 1mn yuan to 0.5mn yuan.
The revision also scraps the requirements on foreign insures that wish to set up foreign-invested insurance company in the country of having a 30-year track record and a two-year representative office in China.
Liu Fushou, chief lawyer at the CBIRC, said during a press conference that the revision targets to “attract more market participants in both sectors, stimulate market vitality, push Chinese and foreign-invested financial institutions to improve competitiveness and equip China with advanced international ideas and experience”. He also said the CBIRC would publish detailed implementation measures soon.
The new rules are also expected to provide more business opportunities for smaller foreign banks that have specialist expertise.
The impact is expected to be small as the banking and insurance sectors are dominated by domestic institutions. Foreign institutions account for just 1.64% of total assets in China’s banking sector and 6.36% of the total assets in the insurance sector.
FINANCIALS: CHINA PLACES CAP ON PRIVATE CORPORATE BONDS
Some brokerages have reportedly received window guidance from the CSRC and stock exchanges in Shenzhen and Shanghai and are asked to cap the outstanding value of privately sold corporate bonds on exchanges at 40% of the issuers’ net assets. New bond sales above this ratio after 19 September may be used only for refinancing old debt.
This has been a popular financing option among highly leveraged private firms and poor-quality LGFVs. This is a risk prevention move by policymakers.
ECONOMY: LOCAL MOF UNITS INVESTIGATE LOCAL GOVERNMENT DEBT ISSUES
Local MOF units have reportedly started investigations into potential violations of debt raising and implicit debt rules by local governments.
An investigation in Fujian province is said to consolidate data from nine provincial-level banks in order to verify local government investment data and uncover implicit local government debt that has not been recorded; known sources of hidden local government debt will also be checked to see whether it has increased or has been resolved according to the implementation plan. Other regions including Zhejiang, Jiangsu, Shanxi and Chongqing are reportedly also asked to submit investigation reports, though follow-up actions are still unclear, according to a local MOF official.
The local MOF units, established this year as part of the government reform plan, are authorised by the MOF to monitor debt levels, control debt risks, as well as make improvement plans at the local governments. In effect they are central government officials placed at the local level to monitor local government policy implementation and debt rule compliance.
ECONOMY: TIANJIN ENCOURAGES TRANSFER OF GOVERNMENT FUNCTIONS FROM BEIJING Tianjin issued several incentive measures to take over some functions from Beijing and boost the integrated development of the Beijing-Tianjin-Hebei region.
Tianjin eased restrictions on hukou registration and pledged provision of more high-equality education services.
The city aims to improve financing support policies for projects transferred from Beijing city, which include the development of key science parks.
All non-local hukou workers with an employment contract with companies in Beijing will be eligible to purchase a property in Tianjin. The requirement of social security or income tax payment receipts has been removed.
Beijing city is looking to decentralise by transferring government functions to Xiongan and Tianjin. This sits at a cross-section of both the Beijing-Tianjin-Hebei regional integration plan and Beijing’s 2016-2035 development plan announced two years ago, which involves capping Beijing’s urban population, alongside reducing the number of government organs and industries headquartered in the capital.
ENVIRONMENT: BEIJING CITY ISSUES RULES ON GARBAGE SORTING
The Beijing city government issued a draft proposal on promoting garbage recycling for public opinion. The draft set out five categories of garbage—kitchen waste, furniture and home appliances, construction waste, rural solid waste, and other waste.
The draft rules hold all individuals and organisations responsible for the proper sorting and disposal of any garbage they produce. Individuals who break the rules may be fined up to 200 yuan, while organisations may be fined up to 50,000 yuan. Restaurants may not provide disposable chopsticks or spoons, unless upon a specific request. A hotel that offers disposable daily necessities could be fined up to 5,000 yuan.
