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China – Financial Market

China has a young financial services & professional services sector that is expanding at explosive rates to meet the demands of a fast growing and increasingly wealthy nation. 

Key trends that are reshaping China’s financial market are

Banking System

a.       Online banking was a popular buzzword within China’s financial industry last year. These shifts in banking bring big opportunities for future growth.  Since the first launch of an internet-based wealth management product the number of registered users had gone beyond 149 million by the third quarter of last year. 

b.       Internet users from 20 cities across China, 94% of them have used an online payment platform. China is increasing innovation in digital payment via a variety of methods, including QR-codes, mobile-payments, etc. The data behind consumers’ digital payments make financial industry to further understand its consumer from different perspectives, thus realizing a win/win situation for both the credit card and wealth management market.

c.       The elderly population has become more financially independent and secure. 70% of surveyed people over the age of 55 claimed to have purchased investment or wealth management products. Additionally, more than half of the older respondents had life insurance, while 45% have at least one credit card.
China's rapid technological progress has brought about a revolution in the country's banking industry.

Insurance sector

China’s insurance sector is going through a period of momentous changes, which will shape the future of the industry, creating new challenges or exacerbating existing ones, but also opening up spaces of opportunity and growth for global insurance companies well prepared for the journey. It is estimated that the total life premiums will grow from 1.5 trillion RMB in 2017 to 1.86 trillion RMB in 2020.  

Progressive moves to a non-tariff system in motor insurance business, which contributes ca. 77% of property and casualty (P&C) premium , was started in 2013 and extended to an increasing number of cities in 2015 and 2016. This is transforming the motor insurance business, marked by oversupply and an already fierce competition which is now intensifying, causing further dropping of premium rates.

Debt Market

China’s bond markets are in their infancy and remain fragmented in terms of regulation but they are growing rapidly and will be an important component in the building of China’s capital markets. 

It is predicted that China's local government bond market will grow to more than $3 trillion in the next three years from the current $1 trillion.

China's bond market will double in size from the current $9 trillion over the next five years, overtaking Japan's to become the world's second largest behind the United States

Fund Market

Chinese financial firms increasingly want to open funds in the country and tap the multitrillion-dollar institutional investor market there.

Chinese private funds' assets under management grew 54.6 percent last year, to $398 billion. Institutional assets across the country leaped 500 percent from $1.1 trillion to $7.1 trillion between 2005 and 2015, and could hit $10.8 trillion by 2021 with global asset managers taking an increasing proportion.

China could very well be number two or number three in hedge funds and private equity within the next two to three years.

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