BOAO, China/BEIJING (Reuters) – 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 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 also will 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 to allow foreign banks and insurance companies 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. U.S. President Donald Trump set tariffs on hundreds of billions of dollars worth of Chinese imports last year to force change, and Beijing retaliated with tariffs on U.S. goods.

Also expected to be discussed this week is a new offer from China to allow U.S. cloud computing companies access to China’s fast-growing market through special Chinese free trade zones, an industry representative briefed on the plan said.

U.S. negotiators have pushed for China to relax restrictions on cloud services as part of the wide-ranging trade talks, but China has kept a firm grip on the sector, citing cybersecurity concerns. The industry representative said there were many questions about the proposal, including security of data sent throughout China and whether they would be able to retain full ownership of the operations.

Sources told Reuters on Wednesday the two countries have made progress in all areas under discussion with unprecedented movement on the touchy issue of forced technology transfers, but there still are differences on protections for intellectual property and how to enforce any deal.

Chinese state-owned firms bought about 1.5 million tonnes of U.S. soybeans on Thursday for shipment in July and August, in a possible goodwill gesture as talks grind on.

‘NOT GOING TO GIVE UP LEVERAGE’

White House economic adviser Larry Kudlow said the United States may drop some tariffs if a trade deal is reached while keeping others in place to ensure Beijing’s compliance.

“We’re not going to give up our leverage,” he told reporters on the sidelines of a trade conference in Washington.

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, adding that the country would 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.

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.

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.

Kudlow said Washington was willing to keep negotiating for a few more weeks, if not months, to strike a deal but declined to give a forecast for a final agreement.

“It’s not time dependent. I want the Fed to be data-dependent, but I don’t want my trade talks to be time-dependent. We’ll get there when we get there, and it will be a historic moment,” he said at an event in Washington.

‘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, echoing similar comments earlier this month.

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 respond to previous support measures.

Some 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.

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

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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 other means.

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.

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