Agricultural Bank of China File photo: VCG

A wholly owned subsidiary of the Agricultural Bank of China (ABC) has been approved to set up a wealth management joint venture (JV) with BNP Paribas Asset Management, ABC said on Wednesday in an online statement.

The move indicates that the potential of the Chinese wealth management sector is being further explored, with foreign investors keeping bullish on the country's capital market, as China's high-quality opening of the financial market progresses.

According to the announcement, ABC Wealth Management Co will cooperate with BNP Paribas Asset Management to set up a JV wealth management company. ABC Wealth Management Co will hold 49 percent of the venture and BNP Paribas Asset Management will hold 51 percent.

"Foreign banks' cooperation with Chinese banks is based on China's huge market and its growth outlook," Dong Dengxin, director of the Finance and Securities Institute of the Wuhan University of Science and Technology, told the Global Times on Wednesday. 

Increasing cooperation in this sector shows that China's strategies of globalization and opening of its capital market have been recognized by most foreign countries.

"With economic development, Chinese people will demand more wealth management services, so China is at the starting point of wealth management market explosion," Guo Xinhua, a managing partner in Deloitte China's investment and management division, told domestic financial media outlet 21caijing.com.

"With the acceleration of financial technology and related regulations, the domestic wealth management market has obvious growth potential," Guo said.

Due to regulations, foreign banks usually use investment models such as JVs with domestic banks to do business in China. 

In September 2020, Amundi BOC Wealth Management Co, a JV of France-based investment bank Amundi and Bank of China, received regulatory approval, with Amundi taking a 55-percent stake. 

In May 2021, US-based BlackRock, Singapore's Temasek Holdings and China Construction Bank set up a JV to carry out asset management business in China. 

Dong stated that China's vibrant domestic market has lifted Chinese banks into world-leading positions, but most of them only operate domestically or have a few overseas branches, Dong said.

"Cooperating with foreign financial firms or banks might be a shortcut for large Chinese banks to enter the global market, and this form of cooperation will accelerate the localization of foreign firms in China," said Dong.

The high-quality opening of China's financial market is steadily advancing. In the fields of banking, securities, insurance and funds, the restrictions on foreign shareholding levels have been gradually lifted and the scope of permitted business widened. Thus, the number of wholly foreign-owned institutions has risen.