Weekend comments by a high-level regulatory official hint at a large-scale change in attitude to financial services and foreign investors. Or not?

This could be big. But it also might not be. It might simply be a continuation of what was already happening. In the words of a long-tenured mainland equity investor, the only predictable thing about China is its utter unpredictability.

Still, over the weekend, Guo Shuqing, the chairman of the China Banking and Insurance Regulatory Commission (CBIRC), was interviewed by «Xinhua», with the same piece also being published on the website of the State Council in English.

The interview is short and clear, and readers can easily compare their reading of the tea leaves with that by finews.asia.

Clear Signal

Still, a few things bear some consideration as part of that. The statements were by the top official of the combined banking and insurance supervisor. They were relayed by the official state news agency and appear to be simultaneously translated into English.

Also, the fact it was promptly relayed by the supreme organ of the government’s administration shows that it has clear endorsement.

If nothing else, they are trying to send a signal.

Friendlier Tone

So what does it say? After getting through all the stuff about reasonable monetary policy and economic recovery in the post-zero-Covid age, Shuqing flagged that financial services «have a lot to offer in the process» when it comes to economic recovery and growth.

That is something after years of what appeared to be a largely neutral attitude to the sector following the liberalization of foreign ownership rules at the cusp of the pandemic.

But he even went further than that, adding that the country intends to «improve financial services» for foreign trade, particularly when it related to emerging economies and developing countries. That will come as a clear relief, and opportunity, for commercial banks with large businesses in Asia, such as HSBC and Standard Chartered.

Difficult Steps

He also «pledged» monetary policy would be «tilted» toward private enterprise while not ignoring some of the more difficult steps the regulator had been forced to take during the pandemic.

Internet-based companies will be supervised on a regular basis, and support given to assist them in creating more domestic jobs while becoming more competitive, which likely means further significant restructuring is on the way.

He also «stressed the need to promote healthy circulation» between real estate and the financial sector, adding that a better balance needs to be achieved in wake of last year’s collapse in prices. But that is not something that is of pre-eminent concern to most foreign banks.

Providing Certainty

His most significant comments, however, were reserved for last. Shuqing indicated that the renminbi will remain partly convertible as it is now and be allowed to strengthen in the medium and long term.

Even more importantly, he indicated that China would continue to open up.

«China will further simplify the procedures for foreign investors to enter the Chinese market and steadily expand institutional opening-up,» Shuqing said.

More Certainty

Both those two statements should add a welcome dose of certainty to foreign banks operating in China as well as any planning on expanding there. However, this being the mainland, there is also a great deal of unpredictability involved with all this.

It could also very well be that the current change in direction is because the pandemic took a far higher economic toll than expected. Still, the statement portends a good start to 2023 – and well-timed to get the widest possible reach with foreign bankers, if nothing else.