China will sharply expand market access for foreign banks and securities and insurance companies, especially in its financial services sector, Premier Li Keqiang said on Thursday, as senior U.S. officials arrived in Beijing for more trade talks.

China has pledged to further open its massive financial markets to foreign investors since last year amid a trade war with the United States. Foreign businesses have long complained that liberalization has been too narrow and implementation spotty.

“We are quickening the full opening of market access for foreign investors in banking, securities and insurance sectors,” Li said in a speech at the annual Boao forum held on China’s southern island of Hainan.

The government will also work on more favorable policies for foreign investors to trade Chinese bonds, Li said.

Li’s remarks add to speculation that China may soon announce new rules that will allow foreign banks and insurancecompanies to increase their presence in China.

Increased access to financial services markets is among a host of U.S. demands for change from Beijing on trade policies and practices. U.S. President Donald Trump slapped tariffs on hundreds of billions of dollars worth of Chinese imports last year to force the changes, and Beijing retaliated with tariffs on U.S. goods.

China is also offering foreign technology companies better access to the country’s cloud-computing market, the Wall Street Journal reported on Thursday. U.S. negotiators have pushed for China to relax restrictions on U.S. cloud computing services as part of wide-ranging talks on a deal to end the trade war.

Sources told Reuters on Wednesday that the United States and China have made progress in all areas under discussion in trade talks, with unprecedented movement on the touchy issue of forced technology transfers as China had put proposals on the table that went further than in the past. There are still differences between negotiators on issue such as protections for intellectual property and how to enforce any deal.

Li said the business scope of foreign banks, as well as market access for credit rating companies, bank card settlements and non-bank card payments, will all be “expanded sharply,” with restrictions on the scope of foreign securities companies and insurance brokers expected to be removed.

“Such measures will be implemented this year in a relatively forceful way,” he said.

Li said China will also announce policies to help foreigners invest in and trade China’s bonds, just before Chinese bonds’ inclusion in the Bloomberg Barclays Global Aggregate Index, one of the most widely tracked in the world, scheduled to start on Monday.

But global investors’ access to hedging instruments continues to be restricted, and clarification on tax collection policy is needed, ASIFMA, a financial industry lobby, said in a report last week.

Li said China will also issue more favorable rules for foreign acquisitions of Chinese listed companies. Beijing is drafting rules related to a new foreign investment law that was passed earlier this month. The rules are expected to be completed this year.

Beijing will revise and shorten a “negative” list of areas where foreign investment is restricted, and will publish it before the end of June, Li said.

No Trust Deficit With U.S.

In a meeting with foreign and Chinese business executives on Thursday afternoon, the premier said he sees no deficit of trust between China and the United States.

“We need to prevent a trust deficit from occurring – otherwise the damage it could do to U.S.-China relations is incalculable,” said Li, adding that trade frictions remain a sticky point.

China must protect intellectual property; otherwise there is no hope for the nation’s transformation, Li said.

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin arrived in Beijing on Thursday and are scheduled to have a working dinner with Vice Premier Liu He. Talks are expected to last for a full day on Friday.

“Hard Battle”

Li also sought on Thursday to ease investors’ concerns over China’s cooling economy, saying Beijing has enough policy tools to fight a “hard battle.”

Li said China will cut “real interest rate levels” and lower financing costs for Chinese companies but did not elaborate on which interest rate he was referring to. Li had made similar comments in a speech earlier this month.

Positive changes in China’s economy in March exceeded the government’s expectations, he said.

Some analysts say shockingly weak industrial profit data on Wednesday has added urgency for more policy easing.

China’s industrial companies posted their worst slump in profits since late 2011 in the first two months of this year amid slowing demand at home and abroad.

Analysts at Capital Economics said they believe the benchmark lending rate will be cut in the weeks ahead, though sources have told Reuters such a move may be a last resort if the economy does not show signs of responding to previous support measures.

Other China watchers say policymakers may be waiting for March and first-quarter data in mid-April for a better picture of whether conditions are starting to stabilize, and how much additional policy easing may be needed.

Li said he could not rule out the possibility that there would be some fluctuations in the world’s second-largest economy this year but added that earlier policy steps were gaining traction.

However, Chinese policymakers, including Li, have stressed that Beijing would not resort to “flood-like” stimulus that would unleash huge amounts of cheap credit, out of concern that could add to a mountain of debt.

The central bank has not cut benchmark rates since the last downturn in 2015, but it has been guiding financing costs lower since last year through various means including liquidity injections.

China’s economic growth cooled to 6.6 percent last year, the slowest pace in nearly 30 years, and analysts polled by Reuters expect a further pullback to 6.3 percent in 2019. (Writing by Yawen Chen; Additional Reporting by Noah Sin in HONG KONG and Dominique Patton in Beijing.)

Topics USA Carriers China