China eases foreign limits in finance as Trump leaves

Laurent THOMET, Ben Dooley
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Donald Trump was treated to a lavish welcome ceremony at Beijing's Great Hall of the People

China gave US President Donald Trump a parting gift as he left Beijing Friday, easing limits on foreign ownership in the financial sector that the United States and Europe have long criticised.

The announcement came after Trump capped his first state visit to Beijing by praising the "highly respected" President Xi Jinping as he took off for an Asia-Pacific summit in Vietnam.

During his visit, Trump had called for a more level playing field for American companies and measures to reduce China's $350 billion trade surplus with his country.

As the president left China's vice finance minister Zhu Guangyao said foreign firms will be allowed to own as much as 51 percent of shares of tie-ups in securities, funds and futures industries, instead of the current 49 percent limit, according to the official Xinhua news agency. The limits will be phased out in three years.

Foreign ownership restrictions in Chinese banks and financial asset management firms will also be lifted, Zhu said, as he discussed the "consensus" reached during Trump's state visit, according to Xinhua.

The US and European Union have long complained about a lack of market access in a host of industries, with foreign firms unable to take a controlling stake in Chinese firms.

In the tightly controlled banking sector overseas companies cannot hold more than 25 percent of a lender's capital, making it difficult for them to play any major role in the local market.

- 'Finally making good' -

"Opening up the financial sector in particular could greatly improve the allocation of financial resources and support China's future development," said William Zarit, chairman of the American Chamber of Commerce in China.

"These restrictions, and many others yet to be addressed, have been hindering economic activity in China for far too long."

But Andrew Polk, a founder of China consulting firm Trivium, said Beijing had merely delayed the move until its own financial institutions were so dominant that they would not be threatened.

"They are finally making good on something they've been meaning to do for a long time, so I still don't see that as real progress on key issues," Polk told AFP.

The EU Chamber of Commerce in China called the decision an "encouraging step" in the right direction, but nonetheless one that came at a late stage.

"It is difficult for foreign firms that have already built up strong positions in the industry to capitalise on these changes in the same way that domestic Chinese firms can," it said in a statement.

It added that it remained to be seen whether foreign entities would be asked for additional licensing or hit with other operational restrictions.

Zhu also said Beijing will reduce duties on auto imports "at an appropriate pace", while Vice Premier Wang Yang said foreign companies will no longer be forced to hand over technology secrets as a condition for entering the Chinese market.

And Wang repeated a pledge in the Communist Party mouthpiece, the People's Daily, that China will also "strengthen the protection of intellectual property, and strictly crack down illegal and criminal acts such as infringement and counterfeiting".

During his meetings with Xi on Thursday, Trump had urged China to "immediately" take greater action on market access, forced technology transfers and theft of intellectual property.

Xi and Trump oversaw the signing of more than $250 billion in business deals Thursday, but analysts downplayed their impact on the trade imbalance, noting many of the agreements were nonbinding and could take years to bear fruit.

- 'Highly respected' -

Trump showered his host with accolades during his visit, tweeting that the meetings between the pair were "very productive on both trade and the subject of North Korea".

"(Xi) is a highly respected and powerful representative of his people. It was great being with him and Madame Peng Liyuan!" he said, referring to Xi's wife.

Trump, who has softened his past criticism of China, again lambasted past US administrations for allowing the trade deficit to balloon over the years.

"How can you blame China for taking advantage of people that had no clue? I would've done same!"

China was the showpiece of Trump's five-nation tour of Asia.

On Friday he flew to Vietnam for the Asia-Pacific Economic Cooperation forum where he and Xi expressed diverging views on global trade.

The forum saw Trump doubling down on his "America First" rhetoric, while Xi sought to defend the "irreversible" tide of globalisation.