The U.S. Senate passed a bill granting China permanent normal trading relations (PNTR), thus clearing one of the final obstacles to the entry of the world’s most populous nation into the World Trade Organization (WTO). PNTR gives insurers more opportunities to do business in the huge Chinese market. While some U.S. companies, notably AIG and Aetna, are already licensed in China, and Chubb and John Hancock are set to join them, new licenses have been very slow in coming, and business activities are currently limited to the regions around Shanghai and Guangzhou. That should change.
The U.S. will benefit from concessions made by the Chinese in negotiations with the EU earlier this year, and the Chinese market will therefore open more quickly. Geographical restrictions are scheduled to be phased out within 3 years, foreign investment in life companies may reach 50 percent, giving “effective management control” to foreign insurers, and wholly owned non-life subsidiaries will be permitted within two years.
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