China will step up efforts to further open up the financial industry to foreign investment as a means of bolstering its post-coronavirus economic recovery and mitigating the risk of a slowdown later this year.

The country must continue to follow through on its commitments to open up the banking and insurance sectors, while leveraging both international and domestic markets, to establish itself as a “popular destination for foreign investment,” according to the State Council, China’s cabinet, in an executive meeting on Wednesday.

It is not the first time Beijing has used the strategy, but it is reaffirming its commitments ahead of a likely economic slowdown in the second half of the year, following a robust first half of the year aided by fiscal stimulus and a strong start due to low production levels last year.

Since the start of the trade war between the United States and China in 2018, Beijing has been attempting to open up its financial markets, with lifting restrictions on financial services at the top of the agenda during negotiations with the Trump administration over the phase-one trade deal, which was eventually signed in January 2020. When China joined the World Trade Organization nearly 20 years ago, it also committed to opening up its financial markets, but it has been chastised for failing to deliver on its promises.

China will take the necessary steps to achieve a higher level of financial openness based on a negative list approach and by aligning with higher international standards, according to the State Council meeting on Wednesday.

In 2020, China updated its negative list for foreign investment, which identifies industries where foreign investment is restricted or prohibited, and removed all restrictions for the financial sector.

It will also refine the market access threshold for foreign-invested financial institutions such as banks and insurance companies, as well as improve the rules governing cross-border transactions between financial institutions’ parent and subsidiary firms and optimize the channels for foreign capital to enter the Chinese domestic financial market.

According to the meeting, the country will also improve management requirements for direct investment projects that are closely related to the real economy. It also stated that China will strive to keep the yuan exchange rate essentially stable, as well as adaptive and balanced.

The State Council also called for the development of mechanisms for the monitoring, evaluation, and early warning of systemic financial risks, as well as the improvement of its macroprudential policy framework.

The meeting also agreed on measures to further facilitate cross-border trade and reduce time and money lost during customs clearance, which should ensure steady growth in imports and exports in the second half of the year despite “changes in the international situation and environment.”

China’s exports increased by 32.2 percent year on year in June, up from 27.9 percent in May, while imports increased by 36.7 percent year on year, down from 51.1 percent the previous month.

Both imports and exports exceeded expectations, but the customs administration warned earlier this month that trade in China may slow in the second half of the year “due to a higher base one year ago.”

The State Council meeting on Wednesday also noted that in recent years, more than 100 foreign-invested banks, insurance, securities, payment, and clearing institutions have been approved to operate in China.

However, while strengthening financial support for the real economy and preventing a systematic financial crisis in the coming years, Huang Yiping, a former central bank adviser and now deputy dean of Peking University’s National School of Development, warned that domestic financial institutions have shown ever-declining efficiency.

So far, foreign firms such as Goldman Sachs, Morgan Stanley, and Credit Suisse have established joint venture securities companies in China, while American Express has been granted a bank card clearing business license for its joint venture. Fitch Ratings joined S&P in entering the Chinese market last year.