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China central bank head says country to step up oversight of systemically important financial firms

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China central bank head says country to step up oversight of systemically important financial firms
FILE PHOTO - Yi Gang, the governor of the People's Bank of China (PBOC), attends a news conference during the ongoing session of the National People's Congress (NPC) in Beijing, China March 10, 2019. REUTERS/Jason Lee   -   Copyright  JASON LEE(Reuters)
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BEIJING (Reuters) – China will increase oversight of systemically important financial institutions and holding companies as the country opens up its financial sector, Central Bank Governor Yi Gang said on Sunday.

“The financial sector opening itself is not the root cause of financial risks,” Yi said at the China Development Forum.

“But the process of financial opening could increase the complexity of risk prevention, and therefore we should improve risk prevention systems.”

China has repeatedly vowed to improve market access for foreign investors and companies amid criticism from major trading partners, including the United States.

The United States is demanding improved transparency and protection for its companies as part of the ongoing negotiations to end the protracted bilateral trade war with China.

China has taken several steps in recent months that it says will improve the business environment for foreign firms and investors operating in the world’s second-largest economy, including reducing foreign ownership limits in the financial sector. It has pledged to do more.

Parliament this month passed a new law that the government says will better protect foreign firms, banning forced technology transfers and illegal government interference in foreign business practices.

“Given the experience of our opening history, we thought that every field that is opening is getting more competitive, better services,” Yi said, adding that China would adopt same regulatory standards for both domestic and foreign financial firms.

The central bank governor also reiterated that China had effectively curbed shadow-banking risks and that Beijing aimed to keep the country’s economic operations within a reasonable range.

(Reporting by Kevin Yao and Shu Zhang; writing by Beijing Monitoring Desk; Editing by Neil Fullick, Robert Birsel)

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