Five Commitments on Foreign Financial Institutions' Entry into China

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Last updated at: (Beijing Time) Monday, December 31, 2001

Five Commitments on Foreign Financial Institutions' Entry into China

The revised Regulation on Foreign-funded Financial Institutions Management presents five commitments made by China on foreign financial institutions' entry into Chinese market, according to People's Bank of China December 30.

Foreign Financial Organizations Participate in RMB Business

The five commitments are:

China will revoke the original regulation that establishment of foreign-funded institutions must get approval by the State Council. Foreign-funded financial institutions can apply for setting up commercial institution in any city within China under the premise of meeting requirements.

Control of targets on foreign exchange service by foreign financial institutions is to be lifted.

China will cancel the current business scale limitation as regulated for foreign firms in RMB market admission, but foreign financial institutions must meet three basic requirements for running RMB business: first, business in China over three years, second, making profit for two consecutive years, third, meeting requirement of caution as stipulated by the People's Bank of China for foreign exchange loan of solely foreign-owned banks, joint venture banks, solely foreign-run financial firms and joint venture firms.

China will loose control on setting up joint venture banks or joint venture financial firms, that is to cancel the regulation that the Chinese side must be a financial institution. Foreign financial providers can choose any Chinese company as their partners.

China will increase business scope for RMB operation by foreign funded companies, and it will also open wider on RMB business services in regions and targets to foreign firms.

The new regulations, published by the State Council, will come into effect on February 1, 2002. The old rules with the same title, promulgated in 1994, will become history on the same day.

Overseas-Funded Banks to Receive Equal Treatment

Five years after China enters the World Trade Organization (WTO), overseas-funded banks in China will receive equal treatment as Chinese domestic banks, according to Dai Xianglong, governor of the People's Bank of China.

In the year of China's entry into the WTO, overseas-funded banks in China will be permitted to handle business services of foreign currencies for Chinese enterprises and individuals. In two years, they will be allowed to deal with RMB business for Chinese enterprises. In five years, the banks will be able to carry out RMB business for Chinese individuals.

China to Allow Renminbi Business for Overseas Banks in Shanghai, Shenzhen

Foreign banks can offer foreign exchange services to institutional and retail customers in China from Tuesday, when the country officially becomes a member of the World Trade Organization (WTO), the country's central bank said on Sunday.

However, the People's Bank of China (PBOC) said foreign banks intending to provide hard currency services to Chinese customers need to replenish themselves with additional capital.

By PD Online Staff Li Yan

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