On February 2, EY's "Annual Report on China's Financial Reform and Opening Up 2025" revealed that the year 2025 is characterized by systematic deepening, high-level advancement, and high-quality development in China's financial reform and opening-up. The logic of reform has comprehensively shifted from the earlier "at-the-border" measures, primarily focused on market access liberalization, to an institutional opening characterized by the alignment of rules, regulations, management, and standards. In this year, "opening up" is no longer simply an extension of the market access negative list but is deeply embedded in the fabric of the financial market through mechanism innovation, ecosystem optimization, and synergistic efficiency gains.
The report indicates that since 2025, China's capital market has steadily advanced its institutional two-way opening. Hong Kong's IPO fundraising ranked first globally in 2025, while the activity of cross-border market connectivity has significantly increased, with the average daily turnover of the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect showing substantial year-on-year growth. This is underpinned by the continuous impetus from institutional reforms such as the entry of medium- and long-term funds. The opening of the bond market has entered a new phase characterized by more active trading and more sophisticated instruments, enhancing the risk management capabilities of foreign investors and encouraging their long-term allocations. The internationalization of the renminbi has deepened significantly, achieving a series of progresses in areas including cross-border trade settlement, investment and financing, and official reserves. The steady development of the digital yuan and its innovative applications in cross-border payment scenarios have further enhanced the convenience and security of the renminbi system, providing strong support for its internationalization. These two aspects advance synergistically, jointly promoting a systematic enhancement of the renminbi's international status and functions.
The report shows that in 2025, China's openness to foreign-funded financial institutions continued to deepen, with policy dividends being continually released. Foreign banks have persistently advanced their strategic transformations, ushering in a new phase of development within China.
As of the end of June 2025, there were 42 foreign-funded corporate banks operating in China. In terms of shareholder background, the parent banks of these foreign banks are predominantly systemically important banks or top-tier institutions by asset size in their home countries or regions, holding significant positions within their local financial systems. They possess strong capital strength and extensive international experience, along with high credit ratings in the capital markets, which provides a solid foundation for their development in the Chinese market. Furthermore, geographically, the shareholders of these 42 foreign banks are distributed across 14 different countries and regions, indicating that foreign banks have become an important force within China's banking sector.
The report posits that with the sustained growth of the Chinese economy, the continuous accumulation of corporate assets and household wealth is driving an increased demand for high-quality financial services. This presents more development opportunities for the investment banking and wealth management businesses of foreign banks, which possess professional advantages. Previously, the business focus of foreign banks in China was primarily on corporate services. However, in the last year or two, many foreign banks have shifted their expansion efforts towards wealth management and cross-border finance, establishing these areas as core growth engines to cope with local competition.
In the insurance sector, 2025 saw foreign capital accelerating its strategic layout in the Chinese insurance market. To date, nearly half of the world's top 40 insurance companies have entered China. Foreign institutions are deepening their presence through methods such as equity acquisitions, strategic investments, and establishing new entities. By the end of September 2025, the total assets of foreign-funded insurance companies reached 3.32 trillion yuan, representing a growth of 12.1% compared to the end of 2024. Additionally, the strategic focus of foreign institutions is expanding from traditional business lines to emerging areas like asset management. For instance, the approval for the establishment of AIA Asset Management and HeQuan Insurance Asset Management has further enriched market supply, contributing to the enhanced internationalization and product innovation capabilities of China's insurance industry.
The report believes that as financial opening policies continue to deepen, foreign capital is expected to persistently penetrate more core business segments and achieve deeper integration with the Chinese market in specialized and differentiated areas such as technology insurance and pension finance.
Regarding the overseas expansion of Chinese institutions, the report notes that Chinese banks are continuously solidifying their global service foundations by establishing clearing banks, expanding subsidiary networks, and upgrading their service systems. In terms of institution types, large state-owned commercial banks remain the primary force driving the overseas expansion of Chinese banks. Unlike the state-owned giants that build comprehensive global networks, the overseas strategies of joint-stock banks are more precisely focused.
In recent years, Chinese insurance institutions have actively served the national strategy of high-level opening up, steadily expanding their cross-border insurance businesses. They have achieved significant results in areas such as export credit insurance and cross-border reinsurance, and are gradually participating in global insurance governance. Regarding the establishment of overseas branches, Chinese insurance institutions have set up approximately 80 overseas entities in over 20 countries and regions, covering key areas including Southeast Asia, Europe, the Middle East, and North America.
Furthermore, Chinese securities companies are also accelerating their pace of overseas expansion. In 2025, at least 11 listed securities firms announced plans for capital increases or the establishment of international subsidiaries, indicating a continuous upgrade in their internationalization processes. The banking and securities industries are actively practicing high-level "going global" and high-quality "bringing in," with these two aspects mutually reinforcing each other to jointly propel the development of China's banking and capital markets to a higher level.
Comments