China and Germany on Friday signed a series of agreements to strengthen cooperation in banking and financial sector supervision, as Beijing moves to open up the country's financial markets. The agreements were signed at the end of a two day visit by German Finance Minister Olaf Scholz to Beijing for talks with Vice Premier Liu He, China's top economic official.
"German insurers and banks will now have easier access to the Chinese market," said Scholz at the conclusion of the talks. "This is an important step that we have been waiting for a long time." But Scholz also urged equal treatment for foreign companies operating in China - a long-running complaint from the European Union and a central issue in Beijing's trade war with the United States.
"We need rules of the game that work well, and reciprocity is the key to achieving this, and that means that Chinese companies in Germany and German companies in China are treated the same," he said.
The talks at the Diaoyutai State Guesthouse in Beijing also focused on allowing German financial institutions to underwrite "Panda bonds" - yuan denominated bonds issued by non-Chinese issuers. "China welcomes more qualified German institutions to join the yuan cross-border payment system and more qualified German banks to participate in the opening and innovation of China's financial markets," Liu said.
A joint statement issued after the talks said China welcomes "German-funded enterprises to enter the Chinese payment market", which US rivals such as Visa and Mastercard have been unable to crack so far. China pledged in late 2017 to allow overseas financial firms greater access to the world's second-largest economy.
Barriers to accessing Chinese financial markets are also a thorny issue in the ongoing trade spat between Beijing and Washington. "It is important that, contrary to recent trends that we can observe elsewhere, we are seeing progress in our cooperation," Scholz said before the talks. Chinese regulators in April 2018 started allowing overseas firms to apply for majority stakes in securities and mutual-fund management ventures and promised to permit full control in three years.
Draft rules to allow foreign companies to hold controlling stakes in insurance firms were published in May. Swiss giant UBS AG becoming the first foreign bank to gain control of its local securities joint venture last November after the easing of restrictions. German insurer Allianz SE and French company Axa also got the green light to set up wholly foreign-owned insurance holding companies in China, that same month.
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