By Ouyang Jie<\/p>\n
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China has seen new highlights in its financial industry. FTSE Russell, one of the world\u2019s three main bond index providers, announced recently that it will add Chinese government bonds to the FTSE World Government Bond Index.<\/p>\n
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The move will enable international investors to enter the Chinese bond market through FTSE Russell\u2019s flagship index. So far, the world\u2019s three major bond index providers have successively included Chinese sovereign bonds into their main indexes.<\/p>\n
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China has notably accelerated the opening-up of its financial sector in recent years. The country has announced over 50 measures that help open the sector wider, including significantly widening the business scope of foreign financial institutions and removing foreign ownership limits in banking, securities, fund management, futures, and other fields.<\/p>\n
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These measures also included granting foreign-funded institutions national treatment in credit investigation, credit rating and payment, and accelerating the opening-up of the insurance industry.<\/p>\n
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China\u2019s accelerating opening-up of the financial industry reflects its confidence in the sector.<\/p>\n
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The opening-up of the financial sector has become an important part of a new round of opening-up in China, which demonstrates the country\u2019s sense of responsibility as a contributor to economic globalization and serves the sector\u2019s development and China\u2019s own needs for high-quality economic development.<\/p>\n
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An open financial market features fair competition and mutually beneficial cooperation. Chinese and foreign financial institutions have achieved win-win cooperation and realized common development in the process of opening-up. Foreign financial institutions have not only served the development of enterprises from their own countries in China, but also established close ties with Chinese enterprises. Meanwhile, domestic financial institutions have also constantly improved themselves in cooperation and competition with their foreign counterparts.<\/p>\n
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As China\u2019s financial market systems are gradually enriched and improved, the RMB assets become more attractive. Therefore foreign financial institutions have more expectations for participating in the country\u2019s financial market and hope to take part in the Chinese capital, bond and interbank markets.<\/p>\n
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Domestic financial institutions need to learn from the experience of their foreign counterparts in these markets to make greater progress in such aspects as operational efficiency, risk management, development of new products, and corporate governance.<\/p>\n
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While bringing a broader market to financial institutions, opening-up can also help these institutions better serve the development of the real economy and meets the needs of people.<\/p>\n
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Chinese companies relied mainly on indirect financing in the past. However, as more innovative companies are going to grow bigger in the future, there will be an urgent need for the financial system to increase the proportion of direct financing for them.<\/p>\n
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Opening-up becomes a powerful engine driving such transformation. With the orderly opening of China\u2019s stock and bond markets, more overseas funds can be invested in outstanding Chinese companies, thus facilitating the healthy development of these companies.<\/p>\n
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According to credible statistics, the stock of China\u2019s bond market reached 112 trillion yuan (about $16.67 trillion) as of the end of August this year, of which 2.8 trillion yuan of bonds were held by international investors.<\/p>\n
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International investment in the country\u2019s bond market has surged at an average annual rate of nearly 40 percent in the past three years.<\/p>\n
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As the middle-income group expands and the population ages in China, Chinese people\u2019s demand for financial services in such areas as asset allocation, wealth management, and endowment insurance and medical insurance continue to grow.<\/p>\n
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Foreign financial institutions with strong sophisticated operation and risk management capabilities in these fields will bring advanced service concepts and management experience, as well as mature products and technologies to the Chinese market, and provide valuable experience for domestic financial institutions.<\/p>\n
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The opening-up of the financial sector could not be done overnight. It needs supporting reforms. China should strengthen financial infrastructure construction, improve its payment and clearing systems, data system, and trading platforms, and develop more relevant products for trade, so as to create a more convenient and well-regulated environment for investors.<\/p>\n
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Opening-up does not mean leaving the market entirely to its own devices. China should also pay attention to the prevention of financial risks, strengthen financial regulation, and enhance the monitoring of cross-border capital flows.<\/p>\n","protected":false},"excerpt":{"rendered":"
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