Foreign banks’ debt quota to be raised

China will moderately expand the mid- to long-term debt -quota for foreign banks this year, the National Development and Reform Commission (NDRC), the country's top economic planner, said Monday, in a fresh push to further open up the country's financial sector.

The country's management of its foreign debts will be on course to focus on the improvement of the financial system efficiency amid the economy's rebalancing, away from the priority that had been given to the risk hedging during the financial crisis, the NDRC said in a statement posted on its website.

The transition has pinned down the government to -encourage domestic institutions to issue bonds in Hong Kong, in addition to expanding the mid- to long-term debt quota for foreign banks at a moderate pace, according to the statement.

In early 2012, the commission announced an expansion of the aggregate long-term debt quota permitted to foreign banks, but banks still ask for more.

Foreign banks consistently struggle to fund their lending in China.

They are subject to the same 75 percent loan-to-deposit ratio that governs their local counterparts. But attracting deposits is a much greater challenge due to the slow and difficult process of receiving approvals to open new branches.

Consequently, most foreign banks rely on their offshore head offices for a large portion of their funding. But capital controls in China mean that increases in capital, via debt or equity, require regulatory -approval.

Further efforts will also be made to reform policies and rules overseeing foreign investment so as to utilize foreign capital flows to the country in a more effective fashion, the NDRC stated in the statement, noting that the Chinese -government will continue a push delving into the "negative list," which identifies industries with bans or restrictions on foreign investment.

Data from the Ministry of Commerce showed that the country attracted a total of $117.6 billion in non-financial foreign direct investment (FDI) in 2013, a jump of 5.3 percent over the previous year, reversing a slight slide seen in FDI for the whole year of 2012.

In addition, the country's outbound investment into non-financial sectors rose by 16.8 percent to total $90.17 billion in 2013, according to the ministry's statistics.