China's Post-WTO Reforms in Financial Services: Achievements and Challenges

After 15 years of negotiation, the People's Republic of China joined the World Trade Organization (WTO) on December 11 2001 as the 143rd member. The tortuous negotiation of China's bilateral market access agreements with the United States and the European Union concluded in 1999 and 2000, and another year and a half was required to bring all of the bilateral market access agreements together into China's Protocol of Accession.¹ Even before the ink was dry on China's Protocol of Accession, many pundits were questioning whether China would live up to its WTO obligations.

Over a year since China joined the WTO, it is clear that China has expended significant efforts towards implementing its WTO commitments. For example, as of September 2002, at least 2,300 government regulations were reviewed and either amended or abolished by over 30 governmental agencies under the PRC State Council. In addition, it has been reported that the State Economic and Trade Commission, the primary regulator for trade matters in China, has amended many of its regulations and cut the number of businesses subject to official examination by one third. The revised Foreign Investment Industrial Guidance Catalogue (外商投资产业指导目录), effective April 1 2002, also reflects significant revisions for implementation of China's WTO commitments.

China's efforts in implementing its WTO commitments include fulfilling its obligations under the General Agreement on Trade in Services (GATS). In the area of financial services,² China promulgated new regulations and implementing rules governing the establishment of Sino-foreign joint venture fund management companies and Sino-foreign joint venture securities companies, amended the PRC Insurance Law(中华人民共和国保险法), and issued new regulations concerning the administration of foreign-invested insurance and reinsurance companies, insurance appraisal companies, insurance brokerage firms, and insurance agency institutions. The China Securities Regulatory Commission (CSRC), the regulatory authority in China's securities market, and the China Insurance Regulatory Commission (CIRC), the regulatory authority in China's insurance market, each announced the abolition of approval requirements for certain businesses and operations of market participants.³ Moreover, the Supreme People's Court published guidelines in August 2002 (effective October 1 2002) to grant foreign investors a private right of action to sue Chinese administrative authorities in respect of service licence-related decisions.