(Yicai Global) March 25 -- China will open up its financial sector even further this year in a bid to earn the trust of foreign investors in the financial leasing and consumer finance sectors, according to the country's central bank Governor Yi Gang.

China will remove the limit on foreign shareholding in financial asset investment and wealth management firms newly set up by commercial lenders, the People's Bank of China head said at the China Development Forum yesterday. It will also give them unrestricted business scope in securities joint ventures and abolish regulations that force overseas insurers to have a representative office in the country for two years before starting business.

Foreign investment in China's financial sector progressed in leaps and bounds last year. UBS Group increased its holding in local joint venture UBS Securities to 51 percent under new regulations allowing overseas firms to hold a majority stake in such companies; Germany's Allianz set up the first insurance holding company wholly owned by a foreign firm on the Chinese mainland; and Standard & Poor got the green light to issue credit ratings in the country.

"Foreign investors will find that derivatives, hedging instruments and other financial products are developing in China once they enter the market and invest in Chinese yuan assets," Yi said, adding that the PBOC's key task this year is to provide sufficient hedging tools so that the main market players can buy in, sell out and effectively hedge against risk.

China's financial sector has become more open and more competitive, he continued, saying international markets have noticed this shift. Chinese mainland shares were officially included in the MSCI Global Emerging Markets Index in June last year, foreign investors invested in CNY600 billion (USD89.3 billion) more yuan bonds, taking their total holdings to CNY1.8 trillion, and the Bloomberg Barclays Global Aggregate will include yuan bills starting next month, he added.

Editor: James Boynton