Will a foreign fund management company function easily in China?
Foreign funds will likely find it relatively easy to operate in China with access to A shares through domestic brokers. Foreign companies may now establish joint venture mutual fund operations with a foreign ownership cap of 33%. The cap will rise to 49% by December 11, 2004, according to China's WTO commitments. China has yet to finalize the Provisional Regulation on the Establishment of Fund Management Companies by Overseas Institutions, released by the CSRC in late 2001. The draft rule largely reflects the requirements in the 1997 Provisional Rule on Management of Securities Investment Funds, which requires each fund investor to contribute US$ 36.2 million and operate funds with a minimum of US$ 24.2 million. The much-anticipated Investment Fund Law is scheduled for a National People's Congress reading in mid-2002 and may take effect as early as 2003.
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