Recent moves by Chinese authorities to further open its economy by scrapping foreign ownership limits should not be viewed as a compromise, state media said, claiming such views to be short-sighted.
«As the time frame was released when Chinese officials and U.S. representatives were locked in a new round of trade negotiations in Washington, some have interpreted this latest development as a trade war concession from Beijing,» said a «Global Times» commentary, regarding the latest rules which remove foreign ownership limits for financial sector firms.
«It is undeniable that China has been under certain pressure to open up its capital market to the outside world, but it would be short-sighted to consider an accelerated opening-up as a compromise.»
«Great Significant to China’s Financial System»
According to the report, market opening will contribute to Chinese growth as foreign inflows will improve domestic investor structure and its overall capital markets system.
«After nearly three decades of development, China's capital market has shifted toward a high-quality and steady-growth model as opposed to a high-growth one,» the report said.
«But now it is time for the domestic market to face competition from mature overseas markets more directly. As such, intensifying the opening-up of the financial sector is of great significance to China's financial system.»
Improving Capital Markets
The report continued to laud the «great development and prosperity» of Chinese markets as reasons to further liberalize, citing U.S. capital markets as a leading example and a goal to aspire to for the dividends it generated for global investors.
It highlights «low valuations» as a reason for foreign demand in China’s capital markets evidenced by moves such as increasing A-share inclusion by global benchmarks like FTSE Russell, MSCI and S&P Dow Jone Indices. Nonetheless, the report did also noted unique risks such as «local customer culture, market conditions, regulatory rules and institutional mechanism in China are different from those in the Western market».
Concurrently, unlisted rural and city banks in China have made more than 1,400 share sales attempts on e-commerce platform Taobao with reportedly deep discounts that still resulted in over half of first attempt auctions failing to attract bidders.
