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China Steps Up Opening of Insurance Market
With China's impending accession to the WTO, redoubled efforts have been made by the foreign insurance companies to get in for a share from China's insurance market. A great market on the point to open to the outside world, it has long been a hot topic running through China's negotiations with the US and EU.
By the end of 1999, about 200 representative offices with 113 foreign-funded insurance institutions from 17 countries and regions have been permitted to set up in 14 cities of China. According to Sino-US WTO agreement, China will permit foreign insurers to conduct exclusive foreign-funded non-life insurance business in two years, eliminate regional restrictions in three years, and give go-ahead to group, health and endowment insurance in five years after it gets full WTO membership. Meanwhile, following agreed terms with EU, a foreign share control of as high as 50% in life insurance joint ventures will be assured by China.
China's insurance industry has accordingly stepped up the pace of market opening to its foreign counterparts, showing the great courage of China in institutional reform and market accession. Early in the year, the Chinese government had promised license issuance to another 7 European life and non-life insurers, an act warmly welcomed and hailed by a new load of applications from Germany's Alianz and Gerling, Britain's CGNU and StandardLife, France's CNPAssurance, Italy's Generali and the Netherland's Aegon and ING. This indicates not only China's attitude and determination in opening up wider but also its response in meeting foreign companies' eagerness to get into the country's huge market.
The Chinese Government's opening effort has also been shown in deciding foreign insurance companies' share control rate and foreign capital listing, which is of remarkable significance in expanding funding channels and raising operation efficiency. On top of this, a new regulation on administration of foreign insurance institutions is now also being mulled, which will for the first time enlarge fund using scales and allow overseas insurers to directly buy in and sell out A shares within a certain amount. This is seen by experts as a bold action to break away from past "forbidden zones" and inject fresh vigor into China's stock market.
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