CHINA BANKING AND FINANCE NEWSLETTER
Vol. 4, No. 3 - February 28, 2003
TOPICS THIS ISSUE:
- Rules For Sino-foreign Trade Firms Issued
- China Banking Regulatory Commission To Be Formed
- Official Says The Proportion of Insurance Capital in Securities Investment Market Is Appropriate
- China Revises Rules On International Payment Declaration
Rules For Sino-foreign Trade Firms Issued
The Interim Rules Concerning the Establishment of Sino-foreign Foreign Trade Companies was promulgated by the Ministry of Foreign Trade and Economic Cooperation ("MOFTEC") on January 31, 2003.
The new rules ("Rules") ease approval requirements for setting up Sino-foreign joint venture trading firms. It also abandons geographical and quantitative restrictions. According to the Rules, starting from March 2 this year, foreign investors with average annual trade volumes exceeding US$ 30 million for three consecutive years will be permitted to apply to establish joint venture firms. The annual trade volume requirement will be lowered to US$ 20 million, for three consecutive years, for foreign investors who register their joint ventures in China's central and western regions. Chinese partners of the joint ventures must have trading rights, and must have conducted import and export business worth more than US$ 30 million annually on the average for three consecutive years. If the joint ventures are registered in China's central and western regions such requirement will be reduced to US$ 20 million.
An additional but very important provision of the Rules is that the joint venture must have at least 50 million Yuan (approximately US$ 6.04 million) in registered capital. If the joint venture is registered in China's central and western regions, the joint venture only needs to have at least 30 million Yuan (US$ 3.62 million) in registered capital.
Foreign investors are allowed to hold between 25 percent and 49 percent of the registered capital, while Chinese partners must hold at least 51 percent of the registered capital.
Source: business weekly
China Banking Regulatory Commission To Be Formed
An official with the People's Bank of China revealed at a seminar hosted by the State Development and Planning Committee that China would establish a Banking Regulatory Commission that would be independent from the central bank.
According to such official, China is implementing this structure because of the benefits realized by other developed countries that use such system.
Source: China Business and Trade Daily
Official Says The Proportion of Insurance Capital in Securities Investment Market Is Appropriate
Investment from China's insurance industry in 2002 accounted for 30 percent of all security investment funds in China, according to Wu Xiaoping, vice-chairman of the China Insurance Regulatory Commission ("CIRC").
Wu further stated that he is of the opinion that the investment level is appropriate but he does not support further investment in the security investment fund market by the insurance industry. Wu indicated that over-investment in the security investment fund market by the insurance industry would result in too much risk to the industry and also violate basic investment principles.
According to China's amended insurance law, insurance companies are allowed to invest in the domestic capital market, but all investment operations must be under the supervision of China's State Council and the CIRC.
Wu stated that China's insurance industry was developing very quickly. CIRC statistics indicate that the total assets of China's insurance sector reached 649.4 billion Yuan (about US$81.2 billion) in 2002 (41 percent more than in 2001) and the available insurance capital (AIC) amounted to 579.9 billion Yuan.
Source: Xinhua News Agency
China Revises Rules On International Payment Declaration
The State Administration of Foreign Exchange ("SAFE") announced on February 25, 2003 that it had changed the rules on the declaration of international payment statistics, and the new version will come into effect as of March 1 this year.
A spokesman for the SAFE said the move is aimed at adapting to the tremendous changes that occurred over the past a few years in the field of declaration of international payment statistics.
The revised version stresses that traders in international trade should declare to the SAFE their relevant incomes and payments. It also regulates that international payment and income through domestic financial institutions should be declared by the trader if he or she is a Chinese resident, or declared by the related financial institution if the trader is a foreigner. The new rules also provide detailed requirements governing the declaration of foreign-related trading of securities, futures and options.
Source: www. peopledaily.com
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