China's financial regulators have taken a number of measures this year to promote the opening up of financial markets, an important step towards a more integrated and two-way financial system.
A key element of this effort is the gradual internationalisation of China's currency, the renminbi (RMB). To support this process, Chinese regulators have optimised mechanisms such as Bond Connect and the Cross-Border Interbank Payment System, making it easier for foreign investors to access Chinese markets and strengthening the role of the RMB in global trade and finance.
Between January and August, RMB payments accounted for 26.5 percent of the total value of cross-border trade transactions, reflecting the growing global use of the currency. Data from SWIFT shows that the RMB is the fourth largest currency for payments in the world, the second largest currency for trade finance and the third in the International Monetary Fund's (IMF) currency basket.
China is now the world's second-largest bond market, with foreign investors holding a record 4.6 trillion yuan ($628 billion) in Chinese bonds, said Lu Lei, vice governor of the People's Bank of China.
At the same time, foreign financial institutions are accelerating their expansion into the Chinese market. In May, Belgian group Ageas invested 1.075 billion yuan to acquire a 10 percent stake in Taiping Pension Insurance (TPP), a subsidiary of China Taiping Insurance Holdings.
This trend is part of a broader movement where international insurers such as AXA of France, Prudential of the US and Generali of Italy have made significant strategic investments in China through acquisitions and joint ventures.
As of 30 June 2024, 67 foreign insurance companies were operating in China and 68 representative offices had been established. The total assets held by foreign insurance companies in China amount to 2.67 trillion yuan, according to data from the National Administration for Financial Regulation of China.
Xu Xian, vice president of the Shanghai Insurance Association, said China's insurance market offers huge opportunities for foreign investors. "Foreign capital will play a key role in the country's high-quality financial development, especially in areas such as technology financing, green financing, inclusive financing, pension financing and digital financing," Xu said.
Growing international interest is further supported by the lifting of foreign ownership limits in key sectors, including banking, securities, insurance, asset management and futures, offering further opportunities for global financial institutions to deepen their presence in China.
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