Companies registered and individuals working or living in the Shanghai Free Trade Zone (FTZ) will be allowed to buy cross-border insurance, investment and other services, says the Shanghai government as it introduces new rules to further ensure foreign financial institutions are treated equally as their domestic counterparts.
The specific types of overseas financial services shall be separately stipulated by financial regulators.
The Shanghai government is promoting more opening-up in the Shanghai FTZ which marks the 10th anniversary of its establishment this month.
Commenting on cross-border purchases of insurance policies, the head of the actuarial department of a life insurance company told China Times, “Purchasing cross-border insurance in the Shanghai FTZ is definitely not like the so-called buying of insurance policies in Hong Kong. Rather, as previously suggested by representatives of the National People’s Congress in the insurance industry, life insurance companies registered in the FTZ are to develop yuan-denominated overseas protection plans as well as insurance products with investment functions.
“The move can not only solve the actual financial service needs of enterprises and individuals in the FTZ but also support the cross-border investment of insurance funds and the internationalisation of the renminbi.”
Lawmakers have proposed that life insurance companies in the FTZ be directed to pilot insurance businesses involving long-term foreign exchange management, and exchange corresponding foreign currencies in the offshore market through free trading accounts for investment in overseas markets or overseas yuan markets. The amount of funds to be invested should not be limited by the company’s QDII (qualified domestic institutional investor) quota, they say.
Pilot financial-sector relaxation measures
More broadly, to level the playing field between domestic and foreign-owned financial institutions, the municipal government has issued a document spelling out the plan for implementing pilot measures to promote the opening up of Free Trade Zones and Free Trade Ports.
A total of 31 measures are set out in the plan relating to trade in goods, trade in services, digital trade, temporary entry of business personnel, and optimisation of the business environment. Shanghai states that it will use one year to focus on promoting the implementation of various pilot measures.
The measures allow foreign-funded financial institutions to carry out new financial businesses specified by the financial regulators. Specifically, foreign-funded financial institutions in the Shanghai FTZ can apply to engage in new financial services that have been carried out by Chinese-funded financial institutions, and foreign-funded financial institutions. Financial regulatory officials must adhere to the same rules for Chinese and foreign-owned financial institutions when vetting their licence applications. The officials have to make a decision on the application without any delay and inform the applicant no later than 120 days of their decision.
The Shanghai FTZ was formed in September 2013. The zone has seen many firsts including the first foreign legal person of a reinsurer, the first wholly foreign-owned insurance company, and the first foreign insurance brokerage agency approved to expand its business scope.
The Lingang New Area, which was added to the Shanghai FTZ in August 2019, is expected to become an emerging financial centre for integration and cooperative governance.
Since its founding, the Shanghai FTZ has attracted 135 insurers.
