Why Open a Bank Account in China?

For British citizens relocating to China or engaging in business there, a local bank account is essential for seamless financial management. China’s cashless economy, dominated by mobile payment platforms like WeChat Pay and Alipay, relies heavily on local bank accounts for transactions, from paying bills to online shopping on platforms like Taobao. In 2025, China’s e-commerce market is valued at US$2.1 trillion, with 70% of retail sales occurring online, making a bank account critical for daily life. A local account also simplifies receiving salaries, paying rent, and managing cross-border payments in Renminbi (RMB). As Kristina Koehler-Coluccia, Head of Business Advisory at Woodburn Accountants & Advisors, notes, “A local bank account greatly simplifies life in China, offering access to services that foreign cards often can’t provide”.

Step-by-Step Guide to Opening a Bank Account

Opening a bank account in China as a foreigner involves specific requirements and procedures. Below is a clear, step-by-step guide tailored for British citizens, based on the latest 2025 regulations and practices.

Step 1: Confirm Eligibility

Foreigners, including British citizens, can open bank accounts in China, but eligibility depends on visa status. You must hold a valid visa with at least six months’ validity, such as a Z work visa, X student visa, or L long-term private affairs visa. Tourist visas (L visas for short stays) are typically not accepted. You must also be physically present in Mainland China, as remote account opening is rare, except through international banks like HSBC in specific cases.

Step 2: Choose a Bank

China’s banking sector includes major state-owned banks, commercial banks, and international institutions. For British citizens, the “Big Five” banks, Bank of China (BOC), Industrial and Commercial Bank of China (ICBC), China Construction Bank (CCB), Agricultural Bank of China (ABC), and Bank of Communications (BOCOM), are popular due to their extensive branch networks and English-language services in major cities like Beijing and Shanghai. International banks like HSBC, Citibank, and Standard Chartered offer familiarity and multi-currency accounts but may have stricter requirements, such as a minimum balance of £15,000 for HSBC Advance accounts.

Consider factors like branch accessibility, digital banking capabilities, and fees. For example, ICBC’s WeChat Banking service allows account management via WeChat, while BOC offers a Current All-In-One Account for multi-currency transactions.

Step 3: Gather Required Documents

Chinese banks enforce strict “Know Your Customer” regulations, requiring a comprehensive set of documents. Prepare the following, ensuring originals and photocopies are available:

• Valid Passport: Your primary identification document, with the name matching exactly across all documents to avoid delays.
• Chinese Visa or Residence Permit: A valid visa or temporary/permanent residence permit, with at least six months’ validity.
• Proof of Address: A rental agreement, utility bill, or Temporary Accommodation Registration Form from the local Public Security Bureau.
• Chinese Mobile Phone Number: A local number registered in your name for verification and communication.
• Proof of Employment or Study (if applicable): An employment contract, letter from your employer, or admission letter from a university for students.
• Police Clearance Form (sometimes required): A registration form from the local police station, particularly for new arrivals.

Some banks may request additional documents, such as a Taxpayer Identification Number (e.g., National Insurance Number for UK citizens) for cross-border transactions.

Step 4: Visit a Bank Branch

In-person visits are mandatory for most Chinese banks, as online account opening is limited. Choose a branch in a major city, where staff are more likely to speak English and be experienced with foreign clients. Schedule an appointment if possible, and bring a Chinese-speaking friend or interpreter if you’re not fluent, as application forms may be in Chinese.

At the branch, approach the information desk and tell them you would like to open a bank account. Staff will provide an application form and guide you through the process. Expect identity verification and document checks, which may take over an hour.

Step 5: Select an Account Type

Choose between a savings account (for daily expenses and electronic payments) or a multi-currency account (for international transactions). Debit cards are standard, linked to mobile payment platforms, while credit cards are less common for foreigners. Most savings accounts charge an annual fee of around 10 RMB (approximately £1.10), automatically deducted from the account.

For business owners, corporate accounts require additional documentation, such as a Business Licence and proof of state approval for foreign-invested enterprises. These accounts face stricter compliance checks and may take weeks to process.

Step 6: Make an Initial Deposit and Pay Fees

Most banks require an initial deposit, typically 40–50 RMB (£4–£5), though some, like CCB, may require higher balances (and up to 50,000 RMB for certain accounts). A registration fee of 40–50 RMB is also standard. Carry extra cash (around 100 RMB) to cover unexpected costs.

Step 7: Receive Your Bank Card and Set Up Mobile Payments

Once approved, you’ll receive a debit card and account details, typically within one to two weeks, though some banks issue cards on the spot. Link your account to WeChat Pay or Alipay for seamless transactions, as cash is rarely used in urban China. Activate online banking or mobile apps for account management. Be cautious with security, using two-factor authentication to protect against fraud.

Practical Tips for Success

• Visit Major Cities: Branches in Beijing, Shanghai, or Guangzhou are more accustomed to foreign clients and often have English-speaking staff.
• Check Visa Validity: Ensure your visa has at least six months’ validity to avoid rejection.
• Be Patient: Some branches may lack experience with foreigners, requiring multiple visits or additional documents.
• Explore Alternatives: If opening a local account is challenging, consider a Wise or Revolut account for low-fee, multi-currency transactions, manageable from the UK before your move.
• Understand Restrictions: Some banks limit international transfers or currency conversions, especially during government restrictions on foreign currency reserves.

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This article offers an overview of the essential information you need to know to open a bank account in China as a foreigner, including the general requirements, types of accounts and bank options.

Different types of bank accounts in China

It’s crucial to understand the different types of bank accounts available when opening a bank account in China, as each type has unique features and benefits. Like in many countries, the common types of accounts banks in China provide include:

• Savings accounts: Provided by most banks for both individual and corporate clients. They can be used for daily expenses and receiving salaries, with the primary purpose of saving funds.
• Current accounts: Ideal for individuals and businesses handling frequent expenses and payments. Current accounts generally offer little to no interest, as their primary function is facilitating transactions.
• Fixed or time deposit accounts: These allow you to earn a higher interest rate than savings accounts when holding your funds for a fixed term.
• Foreign currency accounts: Suitable for individuals and businesses in international trade, travel, or investment with frequent transactions in foreign currencies other than RMB.

Most major banks in China also offer business banking products and services, including corporate accounts, merchant accounts and payroll accounts. It is important to note that the specific features and benefits of an account can vary significantly between banks, and certain types of accounts may not be available at some banks.

Offshore accounts

If you are a foreign company incorporated and registered outside China, Hong Kong, Taiwan or Macau, you can choose from the following account options for non-resident business entities:

• Free trade non-resident (FTN): Made for overseas companies and only offered in the Hainan and Shanghai free trade zones. This account allows holders to enjoy convenient investment options and great currency exchange tools.
• Non-resident account (NRA): Can be opened with any Chinese bank, available in both Renminbi (RMB) and foreign currencies, preventing foreign exchange risk exposure. NRAs are not available for individuals but only for overseas corporations, primarily used for capital investment from overseas corporations in China.
• Offshore accounts (OSA): A rare form of a Chinese bank account used for conducting operations in foreign currencies, not RMB. The funds can only be sourced from and used for businesses outside China. You can only open an OSA at China’s Merchants Bank, China Bank of Communication, Pudong Development Bank, or Ping An Bank (formerly Shenzhen Development Bank).

What documents are required to open a bank account in China?

When opening a bank account anywhere in the world, you must provide the necessary documents to proceed. To open an account with most Chinese banks, you will have to provide the following required documents:

• Completed application form with your personal details
• Valid passport and visa details
• Proof of address
• Chinese phone number
• Valid work permit, business license or documents supporting employment or student status

In some cases, you may also be required to meet the bank representative in person to open a bank account in China.

Important: Different banks may require additional documents or details. We recommend checking with your chosen bank for accuracy.

How to open a bank account in China

The account opening process may vary slightly depending on each bank’s specific requirements or the type of account. Opening corporate accounts with banks in China also involves a more complex process than opening personal accounts, and banks may take longer to approve them.

The general account application process typically follows a standard procedure:

• Choose a bank: Consider factors such as bank reputation, digital banking capabilities and ease of opening the account. You can choose from the major banks in China, subsidiaries of international banks or traditional banking alternatives.
• Select an account type: Choose the type of bank account that suits your purpose.
• Prepare the required documents: This typically includes your passport, a valid visa or residence permit, proof of address and a work contract. Some banks may provide a document checklist in advance.
• Visit a branch: Generally, foreigners must open an account in person for identity verification. Some banks may require you to make an appointment in advance to ensure that you visit a branch accustomed to dealing with foreigners.
• Complete application forms: Fill out the necessary paperwork, which could be in Chinese. Some banks provide English forms or assistance for non-Chinese speakers. Ensure that you provide accurate and complete information.
• Set up banking tools: You will receive a bank card and instructions for setting up online banking, mobile banking apps, and other banking services. You may also have to make initial deposits.
• Verify and activate account: Some banks may require additional steps to verify and activate your account, especially for online and mobile banking services.

The “Big-Four” Banks in China

China is home to some of the world’s largest banks, mainly because they are government-owned and due to the centralised nature of the country’s financial system. There are currently 4,561 banking institutions and 184 registered commercial banks in China, including branches and subsidiaries of international banks such as Standard Chartered and Citibank. In 2022, the Chinese banking industry held a value exceeding USD 23 trillion according to Statista.

To help you narrow down your bank options, let’s look at the “big four” Chinese banks.

Bank of China (BOC)

The Bank of China is a major state-owned commercial bank, providing various financial services to individuals and enterprises. The Bank of China also has branches in multiple countries, regions, and major cities, including Hong Kong, the US, and the UK.

Key services offered by the Bank of China:

• Current all-in-one account: A current deposit account for personal use, allowing users to hold deposits in RMB and other foreign currencies, including USD, EUR, JPY, SGD and HKD.
• Personal foreign exchange savings account: Includes current savings, term deposit and call deposit accounts that can hold multiple foreign currencies.
• Corporate demand deposit account: A business account for holding deposits in RMB and other foreign currencies without a savings term.

Industrial and Commercial Bank of China (ICBC)

The Industrial and Commercial Bank of China (ICBC) is currently the largest bank in China and the world, with a total assets value of USD 6.12 trillion in 2023. ICBC has a substantial network of branches and subsidiaries in China and worldwide, renowned for its digital transformation and financial inclusion measures.

Key services offered by the Industrial and Commercial Bank of China:

• Current deposit account: An all-in-one current account allowing clients to deposit and withdraw cash in RMB and other foreign currencies.
• Corporate current deposit account: A current deposit account for corporate clients to save and manage cash in RMB.
• WeChat banking: Provides the flexibility to contact the help desk, access accounts and get financial information through WeChat.

Agricultural Bank of China (ABC)

The Agricultural Bank of China (ABC) is another central Chinese bank with branches across China and a few overseas, including the US, Australia, and Canada. It provides various financial products and services, including RMB Demand Deposit Accounts and the Farmer’s Benefit Credit Card. ABC is commended for supporting China’s agricultural sector and rural development.

Key services offered by the Agricultural Bank of China:

• RMB demand deposit account: A personal banking account for depositing, transferring and withdrawing funds in RMB.
• Personal fund collection: A service designed to centralise fund management across various accounts.
• Corporate demand deposit account: An RMB deposit account for enterprises to receive, pay and settle funds.

China Construction Bank (CCB)

China Construction Bank (CCB) is another large state-owned commercial bank, recognised for its efforts in fintech and sustainable development. CCB has almost 15,000 branches across mainland China and many more worldwide, including Europe, Australia, and Hong Kong.

Due to its expertise in asset management, CCB is a good option for companies in the manufacturing and construction business.

Key services offered by China Construction Bank:

• All-in-one account: A multi-currency current deposit account offering a seven-day call deposit with higher yields, requiring a minimum balance.
• RMB deposit accounts: Clients can choose between demand deposit and term deposit accounts to deposit funds in RMB.
• Corporate notification deposit account: Designed for enterprises with a minimum deposit of RMB 500,000, offering higher interest rates than demand deposits and more flexible withdrawals than term deposits.

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Evergrande currently faces liabilities of $305 billion (£222.8 billion) and was supposed to pay its creditors $83.5 million (£61 million) in bond interest by noon on Friday, 24 September Hong Kong time. The interest repayment deadline passed without any announcement from Evergrande or the Chinese government. Domestic and foreign investors are spooked; analysts have drawn comparisons between the Chinese giant and Lehman Brothers. Evergrande now has a 30-day grace period to settle things with its creditors before the business officially defaults on its loans. The question on everyone’s minds now is whether the government will intervene to save the firm. If it does not, the days of certain Chinese companies being ‘too big to fail’ are over.

Presenting Evergrande’s predicament as China’s version of the collapse of Lehman Brothers is not accurate. Of course, there are similarities between the two cases that come to mind: Both companies speculated heavily on real estate, took on lots of debt spread deep across their respective economies, and utilised opaque operating practices that enabled them to throw regulators and watchdogs off the scent until trouble was well and truly afoot. However, the main differentiating factor is that one company got too clever with the markets and got its foot bitten off, while the other got too complacent when dealing with the CCP and will likely get a public reckoning, but nothing more.

How did it come to this?

While Evergrande might be the tip of a massive iceberg (also including firms such as Country Garden and Vanke), Beijing has planned on deflating the decades-long property boom balloon it created for itself for a while. In 2017, President Xi gave a speech to the 19th Party Congress where he made clear the party’s view that “Houses are for living in, not speculation;” the People’s Bank of China red-flagged the enormous debt levels of private property developers, such as Evergrande, the following year. As a result, unlike Lehman Brothers, which was ultimately torn apart by market forces, Evergrande will most likely go through a controlled demolition.

But there will inevitably be ripples – a big institution could be coming down. By comparison, when Greece almost brought down the Eurozone in 2012, its national bank faced debts of $200 billion (£146.1 billion). As a result, President Xi could be looking at undertaking one of the largest debt restructurings in history.

So, if the Party supposedly tightly controls events in China – and the economy in particular – why did it allow Evergrande to get into this state? By now the task of reining in all this debt is much more complicated. For the first half of this year, Evergrande was ostensibly a profitable business; it was paying dividends, most of which went directly to the founder, Xu Jiayin. However, in the same way that a child whose parent has told them to tidy their room stuffs their toys in the cupboard, Evergrande hid its bad assets within its inventory. But even China’s state-controlled economy, which allows for remarkable elasticity regarding budgets, can only flex so far, and its regulators are right to worry that Xu’s cupboard is a Pandora’s box. 

How might Evergrande’s collapse affect British financial institutions?

As nobody knows what comes next, instead of speculating on the ways President Xi might resolve the crisis – an unwanted distraction as he prepares for next year’s Party Congress and an unprecedented third term in power – this article will instead focus on the UK’s exposure to Evergrande’s troubles.

John Glen, MP, who holds the government post of Economic Secretary to the Treasury, sought to put his colleagues at ease last week by responding to a parliamentary question concerning the events unfolding in China by asserting that, “[The Treasury], alongside the UK’s independent financial authorities, the FCA, PRA and Bank of England, are closely monitoring the situation.” While Standard Chartered faces “negligible” indirect real estate exposure worth around $6 billion (£4.3 billion) in Hong Kong and $1.25 billion (£913 million) in mainland China, Glen does not expect British banks to be particularly affected – the Treasury’s 2021 solvency stress test returned a judgement of ‘Resilient.’

In conclusion, the Chinese government will likely steer Evergrande to some safe harbour. It will be a massive undertaking, and there is no guarantee that the government can resolve the matter so that the company remains intact or that the anger felt by the millions of people with investments held by the firm is quelled.

Other big Chinese conglomerates will be taking notes; they were already under intense scrutiny over their debt management, and that spotlight will only get brighter. But, unlike with Lehman Brothers, Evergrande is not a source of contagion within China’s markets, and the government can take steps to contain its collapse. As a result, Evergrande needn’t be a watershed moment in China’s economic history; British banks are probably correct in their assessment that “The generality of the growth in the Chinese economy is still very strong when compared with most other parts of the world,” as Standard Chartered CFO, Andy Halford has indicated.

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While British companies continue to sell more and more products and services in China across an ever-growing range of sectors and niches, one issue that most face is ensuring that the money they make from Chinese customers finds its way back to the UK. There are a number of possible pinch points in the process, so here we look at a few of the key issues, including banking and foreign exchange controls, ensuring tax compliance, currency risk and recovering debts.

Banking and foreign exchange issues

China still operates certain foreign exchange controls, and banks are expected to ensure compliance with these rules when facilitating remittances out of the country. As such, the procedures they follow have a major bearing on the process of repatriating profits and getting paid. Overseas companies are not able to open full ‘on shore’ bank accounts in China, and typically British firms trading directly with China will be receiving payment into their UK bank accounts from their Chinese counterparties. This can be a driver for some companies to set up a local entity with a domestic account, but even for those with subsidiaries in China, making inter-company payments to repatriate funds back to the parent company will involve engaging with this remittance process.

Paperwork

Remittances out of China are categorised as either “trade” or “non-trade” items. Trade items, generally meaning buy-sell transactions, tend to be comparatively straight forward, though they still need to be validated through supporting evidence such as customs clearance documents.

Non-trade items, which includes things like service fees and royalties, can be more complicated and are subject to additional scrutiny by both the banks and the tax authorities before payments are permitted. If supporting documents are prepared, and presented where required, the remittance process can be relatively smooth. This notably includes evidence that the appropriate taxes have been accounted for through a tax clearance certificate and a record filing form (for payments above USD 50,000), so an understanding of the relevant taxes is fundamental for payments to be processed, as well as ensuring that the expected amount is received in full. It is worth noting that during the pandemic, banks have increased the amount of documentation they have asked to review, including explanations of business models and transfer pricing arrangements.

These documents may also be reviewed by the tax authorities. This is usually through a ‘post-administration’ process, where after annual corporate income tax filings are submitted, the supporting documents are reviewed to ensure compliance. If the document requirements cannot be fulfilled, a tax deduction for the payment may not be allowed. It is also worth noting that in some parts of China, the tax authorities still want to review the details before the remittance is made.

Taxes

The VAT system in China is not dissimilar to the UK, but understanding whether the client is going to be able to claim VAT back, and agreeing on who will bear the cost, remains an issue many companies do not discuss early enough in negotiations. There are different rates on goods and services, and for companies that sell a combination of the two, this can be an important distinction. For those selling goods, customs duties also need to be assessed and can be an even bigger issue for some products. This remains a tax that many firms do not look closely enough at. The sums involved can be significant, and as well as being costly, getting it wrong can also create delays in importing products.

Understanding whether the client is going to be able to claim VAT back, and agreeing who will bear the cost remains an issue many companies do not discuss early enough in negotiations

Withholding taxes, which can be levied on payments relating to services, royalties, interest or dividends, is another tax area that too many companies only get to grips with late in the sales process. The Chinese customer will act as withholding agent and pay any tax due over to the Chinese tax authorities, meaning the UK company only receives the net amount. To avoid surprises, contracts should make it clear who bears this cost, and it goes without saying that to agree this, it is usually helpful to know how much it will be, and if there might be any double tax relief available in the UK.

The withholding tax rates can be different for different forms of income, so clarity on all sides as to the nature of payments is important. In practice, whether a payment is for a service or a royalty might not be as clear cut as it sounds. Withholding tax on services can also depend on whether a taxable presence has been created by having boots on the ground in China, and firms need to look at the specific activities they are undertaking, where they are doing it, and for how long.

Managing risk and disputes

As banks will not allow remittances to be made without evidence that the appropriate taxes have been withheld, a dispute over this issue could delay receipt of payment. While the prospect of disputes may be lower when inter-company payments are being made (no one likes fighting with themselves), these same processes are relevant. In addition, transfer pricing will be looked at to assess if the payments are on ‘arms length’ terms, and the tax authorities may want to review inter-company contracts to assess the arrangements that have been put in place, so robust paperwork can be necessary.

Credit risk is of course another major issue. Recovering debts can be a challenge anywhere, but particularly if the counterparty is on the other side of the world and in a different legal jurisdiction. While the UK and China do have a treaty on mutual legal assistance, which can be useful for evidence gathering and asset tracing, there is no agreement in place for recognising or enforcing court judgements. This means that cases tend to require local litigation, but using the courts can take resources that smaller companies struggle to find, especially with associated costs for legal support, investigation, and interpretation. There are a range of commercial debt collecting agencies that can support, at a price, but it is best to try not to get into the situation in the first place, with careful trade terms, effective due diligence, or even trade finance products.

Read Also  Everything you need to know about company chops and seals in China

Currency 

Currency is another key variable to manage where trade finance products can have a part to play, along with options like offshore RMB accounts. The RMB is not fully convertible, trading against the dollar within a limited band, but movements can still have a big impact on profitability, especially for longer-term contracts.

Planning

As always, with all these issues, planning is the key. The specifics of every contract will be different, and will create a unique combination of challenges and risks, but it is rare that something completely new will be faced. Other British firms are doing great business and getting paid efficiently for it. Ensure you are following in their footsteps.

Grant Thornton’s China Britain Business Group can help companies dealing with these issues, and others, as they grow their business in China. Please visit their website for more information and to contact the team.

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PART 2: The banking system 

The Chinese banking system is large relative to the size of the Chinese economy and has expanded significantly over the past decade.

The People’s Bank of China (PBOC) has considerable authority over the Chinese banking system. Aside from having the typical responsibilities of a central bank for monetary policy and representing China on the international stage, the PBOC’s role is to reduce overall risk and promote the stability of the financial system. The PBOC also regulates lending and foreign exchange between banks and supervises the payment and settlements system in China.

The PBOC controls five largest state-owned banks in China, namely the Industrial and Commercial Bank of China (ICBC), the Bank of China (BOC), the China Construction Bank (CCB), the Agricultural Bank of China (ABC) and the Bank of Communication (BCOM). Together these banks account for around half of Chinese banking system assets and deposits.

China has also allowed a dozen joint-stock commercial banking institutions and more than 100 city commercial banks to operate in the country. There are also banks in China dedicated to rural areas of the country. Foreign banks are also allowed to establish branches in China and to make strategic minority investments in many of the state-owned commercial banks.

Opening a bank account

RMB basic account
The first account regulated to be opened in mainland China
Allows for RMB payments, transfers and cash withdrawal

Capital account
RMB or foreign currency account
Receives capital from the shareholders as regulated
The capital to be received needs to be pre-approved by the Chinese government

Current account
Foreign currency account(s)
Each account can only support one type of currency
Used for foreign currency settlement (such as trade or labour services)

Look out for our upcoming deep dive series on China’s banking system that will be out in December 2020 coming soon

PART 3: The tax system 

Read the full report here

To learn more about accessing the China market contact wilson.barrie@cbbc.org for more information

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Following tenacious governmental initiatives, financial opening-up efforts are set to pick up pace in China. The China Securities Regulatory Commission, the most important securities regulator in the country, announced on March 13^th that foreign companies will be able to fully own securities firms starting April 1^st.

The move has confirmed China’s determination to further make its financial sector more accessible, and represents stage one of the monetary and trade agreement between China and the United States. Regardless of the testing times, the provision has reinforced the confidence of foreign financial organisations in the Chinese market.

The measure came after ongoing top-level meetings, which will make the financial sector more accessible to foreign investment.

Which path leads China’s government to open its financial sector to international players?

China is gradually opening up its finance sector at a measured pace. Earlier in 2017, a batch of opening up measures were announced by the Chinese government. President Xi announced a further opening up at Bo’Ao Forum and stressed the principle of “sooner rather later, faster rather than slower”. Since then, the opening up has gained momentum, with some measures being fast tracked. Foreign financial institutions have been calling for a more open market some years and it is only in the past few that this has made real progress. They are paying more attention to the Chinese market than ever.

Why is this happening now? Is this because China needs more foreign direct investments (FDI) due to the trade war, or has this always been part of the plan?

The Chinese government has been planning to open up its financial sector for some time, but the economic slowdown and the trade war with the US accelerated the process.

For example, China brought forward the cancellation of limits for foreign participation in life insurance companies, futures, securities companies and fund managers to 2020, when it had originally planned to put this measure in place in 2021.

A ring-fenced market helped China ride through the financial crisis in 1997 and 2008. Chinese banks are much stronger these days, and authorities estimate that opening up the market will not have a detrimental impact on local players. Rather, developing the less innovative sectors of the market will allow improvements in the efficiency of resource allocation.

How has the situation changed since financial markets have become more open?

The business scope for foreign financial institutions used to be highly regulated and market entry barriers were very high. That’s why foreign banks have a market share of around only two percent on the total of Chinese banking assets, according to a report by statistica.com.

Available financial products are very limited. Chinese banks rely heavily on traditional products such as savings and loans. All in all, the Chinese financial market is quite underdeveloped.

What will the financial market look like when it has opened up completely?

An unrestricted finance market will facilitate competition and innovation, both in the business and private sector. More financial products will be accessible, and the interest rate system will be driven more by the market. Several sub-sectors will grow, such as insurances, bonds, FX, commodities, equities and investment banking. Companies will have more ways to obtain financing, and consumers will have more investment options. It will be easier for foreign investors to invest directly in China.

An unrestricted finance market will facilitate competition and innovation, both in the business and private sector.”

Will investment banking be the only kind of banking involved, leaving retail or commercial banking behind?

It will be much more than just investment banking. In the 11 measures announced by the government, almost all sub sectors were covered, including rating agencies, asset management for commercial banks, pension funds, currency brokerage, insurance asset management, underwriting in the interbank bond market, and so on.

Retail and commercial banking may not be the strongest asset of foreign institutions, since it takes time to build up a solid base to compete with local players.

What type of companies would benefit from this the most and how?

With the market becoming more competitive, both Chinese companies and consumers will benefit from this. Local financial institutions will be forced to innovate and increase efficiency. There will be an increased number of products in the market, and an higher number of channels from which to obtain financing.

Foreign financial institutions that entered China early have first-mover advantages: they know the market better and have had more time to build up connections with regulators.

World-leading institutions that have not expanded into China before will also get a warm welcome as cities like Shanghai try hard to persuade the big players to set up their regional headquarters there.

What are the risks and threats to foreign investors?

For foreign investors, the opportunities outweigh risks. One of the potential dangers is the escalation of the US-China trade war, which may push the Chinese government to change its course.

Other risks include the slow approval process of licenses at a local level, which may slow down the pace of penetrating the market. Foreign investors have to be particularly careful with compliance, as legal frameworks are continually evolving. For example, the Cyber Security Law and the Corporate Social Credit System will have a big impact on foreign companies operating in China soon. A lack of understanding of the local culture may also present challenges to newcomers. Local players will compete fiercely, too.

What are the risks and threats to private and state-owned Chinese companies?

The Chinese financial market is still very much controlled by the state-owned banks, which account for about 40 percent of the total banking assets. With more rivals in the market, the local players will have to up their game. Some smaller commercial banks who are already facing a difficult time will go bankrupt, with high non-performing loans constituting a big drag.

The government is planning to appoint a new state-level asset manager, which shows that the number of bad loans are on the rise. The ongoing de-risking campaign will also put pressure on many local banks.

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