China's central bank to draft package for market reforms

China’s central bank is drafting a package of reforms which would give foreign investors greater access to the nation’s financial services industry, according to people familiar with the matter.

The People’s Bank of China will convene an internal meeting on Tuesday to discuss its proposals and get feedback from Chinese institutions, said the people, who asked not to be identified as the matter is private. The meeting will also discuss the timetable for opening up the financial sector and the lessons learned from previous cooperation with foreign firms, the people added.

While the details of the plan have yet to be finalised, it may include permission for foreign institutions to control their local finance-sector joint ventures, as well as raising the current 25 per cent ceiling on foreign ownership in Chinese banks, the people said. It may also allow foreign firms to provide yuan-denominated bank card clearing services, one of the people said. The China Banking Regulatory Commission is also involved in the proposal, the person added.

The PBOC couldn’t immediately comment on the matter. The CBRC didn’t immediately respond to a fax seeking comment.

China sent a signal it plans to press ahead with opening up the financial sector when central bank Governor Zhou Xiaochuan said in June that too much protection for domestic institutions weakens the industry and can lead to financial instability.