China is undergoing a “fundamental change” in the way it views investment from foreign banks, said CG Lai, the chief executive of BNP Paribas China, on Monday.
“It is to their benefit,” he told CNBC’s Geoff Cutmore, “So the motivation is on their side, not on the foreign bank trying to push them.”
As the Chinese economy swings from manufacturing to being more service-oriented, the country is looking to insulate itself from external market forces, including ongoing trade uncertainty, Lai said. In September, BNP Paribas and other banks were granted debt underwriting licenses, which Lai said is a “first step,” signaling more robust access to foreign banks.
Chinese officials this year signed off on a series of new rules giving overseas financial institutions broader access, including being able to launch foreign-invested insurance companies within the country. It’s also softened regulations restricting foreign investments in mainland companies, including limits on mutual fund and securities ownership.
Although creating detailed regulations for foreign investment will take time, Lai expects to see faster movement from Chinese officials in the next year.
“I believe that the Chinese have come to realize their internal market, or their domestic market, is probably the most important one that will cushion them from any impact from the outside. So, they need to revamp and improve their domestic market, including their financial market,” he said.
“They are now trying to get away (from) the shadow banking, they are trying to straighten up the investment products, and all that.”
View on the Bund, in the eastern part of Huangpu District in Shanghai, China on October 12, 2016.
Frédéric Soltan | Corbis News | Getty Images