Investing in China is vital for the future of global financial institutions as opportunities arising from the opening of the world's second-largest economy remain extensive and promising, international executives and experts said.

Asset and wealth management, insurance and pensions, and green and digital finance are the sectors particularly appealing to foreign financial institutions, whose investment in China may gain traction this year amid the country's economic recovery and signs of recovering Sino-US economic relations, they said.

Their comments came after Xi Jinping, general secretary of the Communist Party of China Central Committee, stressed the need to expand opening-up to improve the efficiency and capacity of financial resource allocation.

He made the remarks at the opening ceremony of a study session attended by provincial and ministerial-level officials on Jan 16, themed on promoting high-quality financial development.

"As a global company, investing in and being committed to China is really critical for our future," said Paul Murray, CEO of life and health reinsurance at Swiss Re, a global leader in reinsurance.

In contrast with Europe and the United States, Murray said China is witnessing rapid growth in insurance demand amid the country's robust economic growth and expanding middle-income population.

Sharing similar sentiments, He Xin, Societe Generale's chief country officer for China and CEO of Societe Generale (China) Ltd, said the French international banking group is considering further plans to capitalize on the growth of China's green finance, as well as its wealth and asset management sectors.

"We see vast development potential in China's wealth management market," He said, as the allocation of Chinese household wealth would gradually shift from the real estate market to financial products.

The executives' optimism reflects the attraction of China's financial sector to global financial institutions. Since China removed ownership caps in the fund management and securities industries in 2020, three securities companies with foreign complete stakes and nine wholly foreign-owned fund management companies have been approved to operate in China.

The National Financial Regulatory Administration said on Saturday that the country will further support foreign institutions with expertise in fields including wealth management, elderly care, healthcare and nonperforming asset disposal to come to China for business development.

Sam Woods, deputy governor for prudential regulation of the Bank of England, the central bank of the United Kingdom, said that China's financial opening-up is providing opportunities for both countries' banks to grow and prosper, and efforts to strengthen bilateral regulatory cooperation are essential. He made the remarks at an event at Peking University's National School of Development on Monday.

However, China's financial opening-up is not without its challenges, experts said. Real estate and stock market downturns have dampened investor confidence, coupled with cases where Citi sold its onshore consumer wealth portfolio in China while BlackRock terminated a China-themed fund last year.

China has decided to enhance the nation's appeal to global financial institutions by further aligning domestic regulations and standards with global standards to offer a more predictable and internationalized business environment, known as institutional financial opening-up.

At the opening ceremony of the study session on promoting high-quality financial development on Jan 16, it was stressed that efforts should be made to promote high-level financial opening-up with a focus on institutional opening-up, streamline restrictive measures in line with high-standard international economic and trade agreements and improve the transparency, stability and predictability of opening-up policies.

Safdar Parvez, the Asian Development Bank's country director for China, said there is great potential for China to attract foreign investment by aligning its green bonds more closely with international standards given the country's substantial investment in renewable energy.

"There remains significant scope for China to draw in foreign financial institutions," Zhang Wei, vice-chair of the Tsinghua University National Institute of Financial Research, said on the sidelines of an economic forum held on Friday by Renmin University of China's Chongyang Institute for Financial Studies.

Zhang said he anticipates an upswing in foreign financial institutions' confidence in the Chinese market as China's economy steadily returns to its potential growth rate while Sino-US economic relations show signs of improvement, with bilateral dialogue regarding financial cooperation strengthening.

The China-US Financial Working Group — established in September to strengthen communication via regular and ad hoc meetings — held its third meeting from Thursday to Friday, said the People's Bank of China, the country's central bank.

The two sides had "professional, pragmatic, candid and constructive" discussions on topics such as monetary and financial stability, financial regulation and supervision, the financial market and cross-border payment and data, the central bank said.