Promises Kept: The CSRC Opens the Door to Foreign Investment in Fund Management Companies

July 02, 2002 | BY

clpstaff &clp articles

The China Securities Regulatory Commission (the CSRC) has promulgated new regulations that provide a long-awaited basis1 for the creation of foreign invested fund management companies in China.

By Walter HutchensAssistant ProfessorRobert H. Smith School of Business,University of Maryland

The new FI-FMC Establishment Rules reflect specific WTO accession commitments made by China in the financial services sector and will no doubt unleash a great deal of activity as financial firms seek to participate in China's emerging investment funds industry. Indeed, nearly twenty alliances have already been formed in anticipation of the liberalization heralded by the FI-FMC Establishment Rules.2

Although many foreign financial firms welcome the market access offered by these new rules, investors should note that China is not radically reforming or opening its financial services sector. Rather, it is applying its traditional model of managing foreign investment: offering limited market access in exchange for capital, technology and know how.3

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