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China to Speed up Financial Rule Changes for WTO Entry
China's central bank will pace up amendments and drafting of new financial regulations this year to make them more adaptable to changes after China joins the World Trade Organization (WTO).
The rules to be amended this year are expected to include a regulation on foreign financial institutions which was adopted in 1994. The new rule will give equal treatment to foreign banks with domestic banks.
It is likely to expand the business scope and customer range in renminbi business for foreign banks in China in line with China's WTO commitment.
China pledged to allow foreign banks to conduct renminbi business with Chinese firms two years after its WTO entry and in retail business after five years.
"Foreign banks will have wider access to the domestic market and there should be a certain ratio set between the volume of loans and deposits in renminbi and that in foreign currencies," said Qin Chijiang, deputy secretary general of the Financial Association of China.
The central bank will also for the first time adopt rules concerning close-down and bankruptcy of financial institutions, personal credit management and methods to prevent money-laundering, bank sources said.
The package is expected to set new standards for the financial market and facilitate protection of creditors and clamp-down on irregularities.
"It is a positive move by the central bank to build up a comprehensive regulatory framework which will ensure the legal interest of the financial institutions and better monitor illegal behaviour," said Qin.
It also demonstrated the Chinese authorities' determination to make the financial regulations more compatible with international standards to pave the way for an all-round opening-up in the next few years.
A standard guidance regarding the shut-down and bankruptcy of domestic financial institutions will better solve disputes between debtors and creditors, Qin said.
Delayed payment of debt and bankruptcy of some domestic trust firms over the past few years have damaged the credibility of domestic financial institutions, he said.
The Chinese authorities are also determined to rectify irregularities in the banking industry and boost the credit system for individuals.
New rules concerning clampdown on money laundering will enable banks to make timely discoveries of abnormal money transfers between accounts and monitor the legitimacy of funds, analysts said.
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