China promised to allow U.S banks, securities firms and insurance companies greater access to its financial markets during two days of high-level talks that ended Wednesday.
Companies such as insurance provider American International Group Inc. and Merrill Lynch & Co. Inc. may benefit from the increased opportunities to sell into China’s vast market. Some congressional critics, however, slammed China’s commitments as inadequate.
China agreed to the reforms after a series of meetings Tuesday and Wednesday that were led by Treasury Secretary Henry Paulson and Chinese Vice Premier Wu Yi. The talks did not yield a breakthrough in the nations’ biggest dispute, China’s undervalued currency.
The Treasury Department said in a fact sheet that China agreed to lift a ban on the entry of new foreign securities firms and to allow existing foreign companies to expand their operations to include brokerage and fund management.
In addition, foreign institutional investors will be able to buy up to an aggregate total of $30 billion of shares listed on Chinese exchanges, up from the current limit of $10 billion (euro7.41 billion), Treasury said.
China also pledged to streamline the application process for financial firms to sell 401(k)-style retirement plans, also known as enterprise annuities, the department said.
Finally, China agreed to allow Chinese banks that are partly owned by foreign banks to offer credit and debit cards in China’s currency, the yuan, which “will allow U.S. banks to offer a full range” of yuan-denominated services, the department said.
Foreign ownership of Chinese banks is currently capped at 25 percent. U.S. business groups such as the Financial Services Forum, which represents companies such as Citigroup Inc. and Bank of America Corp., had pushed for China to raise that limit but were unsuccessful.
“For years, we have heard vague assurances of greater market access for American financial institutions, but they rarely seem to become reality from China,” said Democratic Sen. Charles Schumer.
Gov. Marc Racicot, president, American Insurance Association (AIA), has represented the insurance industry at the talks, which are known as the U.S.-China Strategic Economic Dialogue (SED).
“We saw significant progress on at least one specific issue and a strengthened focus on other issues of importance to our companies,” said Racicot in a statement. “The lack of ability for U.S.insurers to expand throughout China, and the inability to offer new products remain among the issues that will require further attention.”
He said his organization has worked on China issues for a number of years and remains committed to full market access. “There is no doubt that with the SED we are further along the path of opening Chinese markets than we would have been without,” Racicot added.
Was this article valuable?
Here are more articles you may enjoy.