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China Mulls Looser Banking Rules Amid International Complaints
Shanghai (AFP) Sep 21, 2006 Financial regulators in China are mulling loosening regulations for foreign banks after criticism that proposed lending rules were far too strict, a state newspaper said Thursday. China, which is gearing up to open its financial services in line with commitments made to the World Trade Organization when Beijing joined in late 2001, proposed minimum yuan deposits of one million yuan (125,000 dollars). Citing unnamed sources, the China Daily reported that the China Banking Regulatory Commission and the Ministry of Commerce were considering lowering the deposit limits after vociferous complaints from foreign banks. "The two sides have been in continuous discussion and working closely in the past few days," the newspaper quoted a banking regulator as saying. "This may finally lead to a lower threshold than the earlier proposal in order to get (China) in line with the WTO principle for a wider open market." A draft of the rules submitted in June stated that foreign lenders could not provide loans of more than 10 percent of their registered capital to a single client. Banks had to also keep overall lending below 75 percent of their total deposits, the newspaper said. Foreign bankers had complained that these criteria would stymie business, especially if the minimum deposit rate was set at such an unrealistically high level. "The demand of foreign banks to draw a single yuan deposit with a minimum amount of 125,000 dollars will hamper most local residents' ability to deposit their money in those banks," one foreign banker was quoted as saying. Vickie Tillman, the executive vice-president of global ratings agency Standard and Poor's credit market services recently said China was unlikely to live up to its WTO commitment to provide full market access to foreign banks. "It is unlikely that the Chinese government will immediately remove all hurdles to foreign banks operations to create a level play field," she told the US-China Economic and Security Review Commission in Washington recently. Major restrictions for foreign banks in China include time-consuming license application procedures, different capital requirement for branch operations, foreign debt quotas and limited equity participation in local banks, she said. In what appears to be efforts to ensure foreigners do not become overly dominant in China, regulators suspended approvals for new domestic and foreign-invested security brokerages. Meanwhile, new merger and acquisition regulations that went into effect earlier this month require that the Ministry of Commerce approve all large deals involving economic security. Also in September, Beijing imposed curbs on the media, insisting that domestic subscribers of foreign news agencies register through the official Xinhua agency, which can also censor all news coming into China.
Source: Agence France-Presse Community Email This Article Comment On This Article Related Links Global Trade News The Economy The Economy
China To Limit Foreign Investment In Shipyards
Beijing (XNA) Sep 19, 2006China plans to cap foreign holdings in the country's ship makers at 49 percent as the government moves to both maintain control over the fledgling industry and tap overseas know how. |
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