Open for business: China lifts cap on foreign shareholdings in life insurance companies – what it means for existing and potential investors

Insurance is one of the most highly regulated sectors in the People's Republic of China ("China" or the "PRC"). There has been a long-standing cap of 50% on foreign shareholdings in PRC life insurance companies dating back to China's World Trade Organization (WTO) accession agreement ("Foreign Shareholding Cap").

For many foreign investors, being unable to exercise full control over what is a sensitive sector made it an unattractive business proposition. As part of China’s recent efforts to liberalize the financial services industry, starting from 1 January 2020, the Foreign Shareholding Cap no longer applies. For those looking to go it alone in China, this development appears to be a game changer. In addition, the legislative instruments by means of which the China Banking and Insurance Regulatory Commission (“CBIRC”) introduced this reform brought about other noteworthy changes. These are discussed in further detail below.

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