Source: Global Times    Published: 2020-06-19

China released a plan Thursday to lower the threshold for foreign investment in listed Chinese companies, a move that an expert said is set to advance the internationalization of the domestic capital market as the country's pursuit of high-quality growth welcomes more global participants.

The Ministry of Commerce issued the draft document to solicit public opinion on administrative measures for foreign investment in listed Chinese companies.

It proposed an effective easing of the investment threshold by lowering the total asset requirements for foreign investors that are not controlling share-holders.

Required assets of foreign shareholders will be reduced to $50 million from previously $100 million, and their assets under management will be cut to $300 million from previously $500 million, the ministry said.

The lock-up period for foreign investors' holdings will be adjusted from 36 months to 12 months.

"As a major country in the global industrial and supply chains, China bears an important responsibility for global economic stability. Lowering the threshold will promote optimal allocation of Chinese and foreign resources and drive up the diversification of equities," said Dong Shaopeng, an adviser to the China Securities Regulatory Commission.

It is an inevitable trend for the Chinese capital market, and it will further advance the internationalization of China's stock market, Dong told the Global Times.

For a modern market ruled by law, sources of capital should no longer be treated differently in non-restrictive and non-prohibited industries, Dong said.

"The high-quality development of China's economy requires wider opening up and welcomes more global market players," he said.

The regulations also show the confidence of China's market regulators, which have strengthened efforts to keep improving their supervision level, experts said.

Chinese regulators are expected to increase the transparency of their supervision, Dong said, noting that foreign investors who violate laws and regulations should be penalized based on law.

Dong Shaopeng is senior fellow of Chongyang Institute for Financial Studies at Renmin University of China.