BEIJING: China’s push to open up its financial sector to foreign banks and financial institutions will be based on the principle of reciprocity and will not reward protectionism by other countries, an official said on Saturday.

China wants to accelerate the process of opening up, but countries afraid of exposing their own financial sectors to competition would not benefit, Chen Wenhui, the vice-chairman of the China Banking and Insurance Regulatory Commission (CBIRC), told a forum.

Without naming any names, Chen said some countries have imposed restrictions on the overseas expansion of Chinese financial institutions, partly because their own banks were unable to operate freely in China.

“Our country’s opening must be based on the principle of equality and mutual benefit. It will not be carried out on a ‘one-size-fits-all’ basis, and should stress mutual benefit and reciprocity.” “For countries and regions that are afraid of opening and implement protectionism, their long term competitiveness will definitely suffer as they only look at short-term gains,” he added.

Central bank governor Yi Gang said last month that China would allow domestic and foreign firms to compete on an equal footing and would expand the business scope for foreign banks in China.

China has been put under heightened pressure by the United States over access to its markets, and has promised to allow foreign investors to enter into trust, financial leasing and auto and consumer financing by the end of this year.

Chen said the market share of foreign banks made up just 1.32 per cent of total banking assets in China by the end of 2017, down from a high of 2.5 percent previously.

Opening up the financial sector to foreign firms would improve domestic resource allocation and support the economy, Chen noted, adding that some foreign financial institutions had already expressed intentions to set up operations in China or buy bigger stakes in their Chinese counterparts.

Published in Dawn, May 20th, 2018