REPEAT: MNI Analysis:Xi's 'New Era' May See Proactive Policies

Repeats Story Initially Transmitted at 11:16 GMT Nov 10/06:16 EST Nov 10

By William Bi

     BEIJING (MNI) - In a sign that China's politics really are changing in the

"new era" helmed by Communist Party Chairman and President Xi Jinping, China

Vice Finance Minister Zhu Guangyao surprised the financial markets on Friday by

announcing the government's plan to lift restrictions on foreign participation

in the financial services sector. 

     The announcement was made on the same day that Xi touted openness and

tolerance in a speech to Asia business leaders in Danang, Vietnam. On the eve of

his visit, Xi also penned a letter published in a Vietnamese newspaper in which

he invoked Ho Chi Minh to describe the bilateral relationship as like "hand and

foot" or "root and leaves of the same plant." On territorial disputes in the

South China Sea, Xi said he was seeking resolutions that can be "accepted by

both parties."

     While it's too early to conclude China has emerged as a new global player,

its decision to open up banks and securities firms, coming on the heels of a

visit by U.S. President Donald Trump this week, was promised to have immediate

effect.

     The policy changes will still need to be formulated into laws and rules,

Zhu said. But he promised that the current requirement that foreigners can't

hold more than 49% in securities firms, fund management companies and futures

brokerage will be lifted to 51% very shortly and removed altogether in three

years. Even state-capital banks won't be able to discriminate against foreigners

after three years. 

     Zhu, before introducing the changes, emphasized that the government's

decisiveness came as a result of "the Communist Party of China's 19th National

Congress on further opening up," a new mantra that will undoubtedly be cited

repeatedly by cadres to showcase their political acumen and allegiance. 

     Problems and conflicts in Sino-U.S. economic relations should be dealt with

through "visionary thinking and constructive methods, and resolved by making the

cake bigger," Zhu said, cited similar comments made by Xi at the congress.

     It was unusually quick for a minister to link a major announcement with the

party congress, which only wrapped up less than a month ago, according to people

familiar with the government's operations. 

     While the announcement was timed to follow the Trump-Xi "chemistry"

displayed during Trump's visit, as Zhu put it, the details were arranged as part

of the government's "timeline and roadmap" for financial opening-up and

"unprecedentedly close cooperation" with the U.S. team that was in Beijing with

Trump. 

     That was more likely flattery from Zhu, as people inside the foreign

service community described the U.S. team as unprepared and dysfunctional.

     There were earlier signs of China re-pivoting its foreign policy approach.

Just before Trump's visit, China unexpectedly agreed to end a year-long

disagreement with South Korea over its deployment of a U.S. anti-missile defense

system. It has also toned down its antipathy toward Japan. In September, Chinese

premier Li Keqiang exchanged congratulatory notes with Japanese Prime Minister

Shinzo Abe as the two countries observed 45 years of diplomatic relations. 

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com