China opens up to Western investment firms

According to the Japanese agency Nikkei, the Chinese authorities have noticeably stepped up the issuance of permits for foreign financial companies wishing to start or expand their investment operations in the PRC. According to the agency, the Chinese authorities are doing this to strengthen investor confidence in the country, which has been shaken after two years of severe anti-COVID restrictions. It is reported that throughout 2022 such permits were issued extremely rarely, but now the PRC authorities intend to intensify efforts to attract foreign investors to the country.

Most of the new permits have been issued in the asset management segment – the Chinese asset management market is valued at $4 trillion. For example, last week the American JP Morgan Asset Management received permission to turn its asset management fund from a joint venture with a Chinese company into its own full-fledged unit. In November, the Canadian financial company Manulife received permission for similar actions with its fund manager in China. In November and December 2022, U.S. investment firms Neuberger Berman and Fidelity International received permission to raise funds from retail Chinese investors, and in January 2023, British investment firm Schroders received preliminary approval to set up its fund manager in China.

Experts interviewed by the Nikkei believe the developments show how quickly China’s regulatory regime can change depending on the political will of the leadership. “The rapid lifting of COVID restrictions was just one such example,” said Harry Handley, senior partner at consulting firm Z-Ben Advisors. In the same way, in the near future, we have a chance to see how rapidly and dramatically the broader contours of leadership action, whether it be geopolitics or economics, can change.

Evgeniy Khvostik