The office building of Morgan Stanley in Beijing Photo: VCG

US financial institution Morgan Stanley Bank International (China) has been approved to open derivative trading business in China starting from Monday, as China is fulfilling its pledge of opening the domestic market wider and share market opportunities with the rest of the world.

The move marks another step in the country's financial opening-up in addition to the banking, securities and bond markets, which will give a boost to the internationalization of the yuan and offer diversified choices for international investors and help them manage risks, analysts said.

With derivative trading business, the company will diversify the kind of products offered to clients in order to meet their risk management and wealth management demand.

In China, the derivative products market has maintained high-speed growth over recent years and momentum is gaining steam, the company said, noting that it hopes to use its global platform and professional capacity to actively contribute to the development of the sector.

"As an institutional innovation in China's foreign exchange market, the opening-up of the derivative products sector will further meet international investors' need to manage risks. Along with the steady internationalization of the yuan, there is great potential for the growth of derivative trading business in China," Cong Yi, a professor at the Tianjin University of Finance and Economics, told the Global Times on Monday.

However, the Chinese authorities should also strengthen financial regulation to prevent risks as the influx of foreign hot money may disrupt the healthy operations of domestic financial market, he said. 

"The further opening-up of the country's financial sector underscores that China is earnestly delivering its pledge. The country's high-level opening-up, stability and upward economic growth trend will provide more opportunities for global companies, including US firms," Dong Dengxin, director of the Financial and Securities Institute of the Wuhan University of Science and Technology, told the Global Times on Monday.

"We seek to diversify, not to decouple," US Treasury Secretary Janet Yellen said at roundtable discussion with US companies during her visit in Beijing on Friday. "China has an enormous and growing middle class, with consumers who are eager to consume American goods and services," she said, according to the website of the US Treasury Department.

Compared with China's continuous opening-up, the US has been pushing for "decoupling" from China and trampling free market and free investment rules, reflecting its lack of confidence in its competition with China, Dong said. It's impossible for the US and US firms to really "decouple" from China and even US' issuance of new government debt relies on China, the major buyer, Dong argued.

In a sign of sound cooperation between Chinese and US business communities, a group of high-profile US executives had visited China in recent week, including JPMorgan Chase CEO Jamie Dimon, Microsoft founder Bill Gates and Tesla CEO Elon Musk.

"Opening-up is China's long-term national policy, and the door of China's financial industry will only be opened wider and wider," Li Yunze, director of the National Financial Regulatory Administration, said at the Lujiazui Forum held in Shanghai in June.

"We warmly welcome foreign-funded institutions with sound operations and excellent qualifications to expand their business in China," Li said.

Official data showed that the balance of the yuan-denominated assets held by foreign entities in China hit 9.88 trillion yuan ($1.39 trillion) by the end of March 2023, up 2.7 percent compared with the reading recorded by the end of 2022.