CHINA BANKING AND FINANCE NEWSLETTER
Vol. 3, No.11 - December 5, 2002
TOPICS THIS ISSUE:
- Foreign Banks Allowed To Operate RMB Business
- New Rules For Tax Collection Issued
- Shanghai Foreign Banks to Reform Foreign Exchange Business
- QFIIs Are Allowed to Invest in China's A Share Market
Foreign Banks Allowed To Operate RMB Business
The People's Bank of China ("PBOC") announced on November 20, 2002 that foreign banks would be allowed to conduct Renminbi business in Guangzhou, Zhuhai, Qingdao, Nanjing and Wuhan.
According to the announcement, subject to approval being issued by the central bank, foreign financial institutions in the aforementioned cities can engage in Renminbi business starting December 1, 2002.
A spokesman for the PBOC stated that this move reflected China's commitments concerning its entry into the World Trade Organization ("WTO"). Upon China's official accession to the WTO on December 11, 2001, it lifted restrictions on the foreign exchange clients of foreign banks by allowing them to conduct RMB business in Shanghai, Shenzhen, Tianjin and Dalian.
According to statistics released from China's central bank, by the end of September this year, there were 181 foreign financial institutions in China, of which 45 had been given approval to conduct business in RMB. The total assets of foreign banks were valued at 47.797 billion Yuan (about US$5.78 billion), with an aggregate loan amount of 38.5 billion Yuan.
Source: Xinhua News Agency
New Rules For Tax Collection Issued
The State Council promulgated new PRC Implementing Rules on the Administration of Tax Collection Law (the new rules), which supersedes the previous rules of the same name adopted on August 4, 1993 (the old rules), to take effect on October 15, 2002.
Under the new rules, the power of tax authorities to enforce tax laws is strengthened. Tax authorities may recover overdue taxes by freezing money in the bank accounts and selling the taxpayers' properties.
The new rules establish a new tax credit rating system to enhance the monitoring of tax payments. Under this new system, taxpayers will be given ratings of A, B or C based on their tax payment records. Those with the best payment records will be awarded an "A" rating and may be exempted from some tax compliance requirements. Those with a "C" rating will be warned and penalized.
The new rules also include several provisions seeking to expand the role that commercial banks and government institutions can play in assisting the tax authorities. For example, if a taxpayer fails to obtain a tax registration certificate, it will not be allowed to open bank accounts. In addition, fines may be imposed on banks or other financial institutions that fail to record the tax registration certificate number in the account of a taxpayer engaging in production or business operations, or to record a taxpayer's account number(s) on the tax registration certificate.
Source: www.scmp.com
Shanghai Foreign Banks to Reform Foreign Exchange Business
Seventeen foreign banks in Shanghai received the go-ahead on November 8, 2002 to initiate a series of reforms on a trial basis with respect to their foreign exchange business.
According to an official with the Shanghai Branch of the State Administration of Foreign Exchange, this is the first time such reforms have been undertaken in foreign-invested banks.
The official said similar reforms have been carried out successfully in 15 indigenous banks, which strengthened the local government's resolve to open up its finance market.
The purpose of the move is to create an environment for Chinese and foreign banks to compete on an equal footing after foreign exchange-related business is completely opened to foreign banks.
The 17 foreign banks include the Hong Kong and Shanghai Banking Corporation Limited, the Development Bank of Singapore, Citibank, the Standard Chartered Bank and others from the United States, France, Australia, Belgium and Malaysia.
Source: People's Daily
QFIIs Are Allowed to Invest in China's A Share Market
The China Securities Regulatory Commission ("CSRC) and the People's Bank of China ("PBOC") jointly promulgated the Interim Rules on the Management of Domestic Investment in Securities by Qualified Foreign Institutional Institutes ("Interim Rules"), which will take into effect on December 1, 2002.
The Interim Rules explicitly point out that QFIIs refers to overseas fund management institutes, insurers, securities companies and other asset management institutions, which are approved by CSRC to invest in China's securities market and granted with a quota by the State Administration of Foreign Exchange ("SAFE"). QFIIs are required to entrust local commercial banks as trustees to manage their assets and local securities brokers to engage in securities trading transactions in China.
The new policy allows for the first time overseas fund managers, insurers, brokerages and commercial banks to invest in China's A shares, Asia's second-largest equity market by capitalization.
Fund managers and analysts have welcomed the plan by saying that foreign capital is key to improving the market.
Source: Business Weekly
A Licensed Chinese Law Partnership
http://www.lehmanlaw.com
Beijing Office | Shanghai Office |
6th floor, Dongwai Diplomatic Office Building
23 Dongzhimenwai Dajie
Beijing 100600 China
Tel.: (86)(10) 8532-1919
Fax: (86)(10) 8532-1999
Email: mail@lehmanlaw.com | Suite 1310, Kerry Centre
No. 1515, West Nanjing Road
Shanghai 200040 China Tel: (86)(21) 6288-2698
Fax:(86)(21) 6288-2699
Email: shanghai@lehmanlaw.com |
The China Finance News is intended to be used for news purposes only. It should not be taken as comprehensive legal advice, and Lehman, Lee & Xu will not be held responsible for any such reliance on its contents.
