THE country’s banking and insurance regulator has published revisions to remove limits on foreign ownership of its banks and asset managers, pushing ahead with a previously announced plan to open its financial system despite rising trade tensions with the United States.

Overseas financial institutions will now be treated the same as local companies, the China Banking and Insurance Regulatory Commission (CBIRC) said in a statement, following through on a pledge announced last year. Stakes were previously capped at 20 percent for a single foreign institution and 25 percent for a group.

The move is part of China’s longstanding effort to increase its integration with the global financial system. China announced a number of financial opening initiatives in November, before the trade conflict that saw the world’s biggest economies raise tariffs on US$50 billion of each other’s exports.

China announced it would allow 51-percent foreign ownership of brokerages and life insurers, with that cap to be removed by 2021. Ownership curbs were also to be eased in other financial industries including banking.

Most of the Chinese opening measures are expected to take effect by the end of this year.

“China is showing they are keeping their promise and that regulators are interested in opening up, rather than closing down,” said Chen Long, a Beijing-based economist at research firm Gavekal Dragonomics.

Foreign banks held 2.9 trillion yuan (US$420 billion) of assets in China at the end of 2016, some 1.3 percent of the total and the lowest share since 2003, CBIRC data show. They earned 12.8 billion yuan in the nation last year, less than 1 percent of the profits at Chinese counterparts.

Even if they take full control of their China ventures, international companies will face multiple challenges, analysts say.

“Banks are allowed to enter an increasingly constricting space,” said Andrew Polk, the founding partner of Beijing-based research firm Trivium China.

The size and complexity of the market will make foreign firms cautious, according to Bloomberg Economics chief economist Tom Orlik. Analysts have also said that China’s capital account opening will need to resume so investors feel more comfortable.

Several major foreign players have been moving to increase their China exposure. UBS Group AG was the first global bank to apply for a majority stake in its China securities venture in May, while Nomura Holdings Inc. and JP Morgan Chase & Co. have sought to take advantage of reduced investment barriers, including by setting up Chinese joint ventures.

Earnings at international banks in China are set to grow more than 10-fold by 2030, according to Bloomberg Intelligence.

The rule changes aren’t just appealing to foreign financial companies. Shanghai-based Bank of Communications Co. would be open to HSBC Holdings raising its stake in the company, Bank of Communications’ board secretary Gu Sheng said.

(SD-Agencies)