Banking and securities 2003 opening up of inter-bank RMB exchanges
2004-2005, merger of A- and B-shares and allowing foreign participation in Chinese banks and fund management; liberalization of the RMB exchange rate policy
2006, foreign banks are allowed to enter the market in full, with geographical and customer restrictions to be withdrawn
Telecommunications: Gradual liberalization of geographical restrictions on value-added services in 2002
Gradual liberalization of fiber-optic cables and fixed-line services in 2003-2005, and increase of foreign ownership in basic telecommunications to 49%
Agriculture: Average tariffs on agricultural products will be lowered to between 14.5% and 15% in 2004, and import quotas will be gradually transferred to the private sector
Insurance: WTO accession will mean full entry into the market, as will fund management; and RMB exchange rate policy will be lifted.
Insurance accession, foreign property and life insurance companies immediately in China to carry out high-risk items of insurance business, the issuance of additional insurance nutrition license
Textile in 2002 in the countries that set the limit of the quota on the basis of the current rate of increase in the quota increased by 27%
Retail accession to the WTO to allow the establishment of joint venture retail enterprises in Beijing, Tianjin, Shanghai, Guangzhou, Dalian, Qingdao and other special economic zones
In 2002, foreign investors were allowed to have controlling stakesIn 2003, all restrictions on geography, number and percentage of foreign ownership were lifted
Appliances, the average tariff rate was reduced to 10% in 2005
Automobiles, quotas for automobiles will be phased out by 2005
Tariffs on automobiles and tariffs on spare parts will be lowered to 25% and 10%, respectively, by 2006
Transportation and transportation will be increased by 27% after WTO accession.
Transportation fulfillment of most-favored-nation (MFN) and transparency clauses
China and the U.S. to increase the number of through-traffic stops within each territory by 2002
Highway operations allowed to be operated by wholly foreign-owned companies by 2003
Medical care to open up distribution services for medicines by 2003
Lifting of administrative controls on the import of large-scale medical equipment after accession to the World Trade Organization (WTO)
Tourism by 2003 Allow foreign investors to hold travel agencies
In 2005, foreign investors were allowed to hold joint venture travel agencies on a wholly-owned basis, but joint venture travel agencies were not allowed to operate outbound travel business for the Chinese people
Timetable for the liberalization of various industries after China's accession to the World Trade Organization (WTO)
1. Eliminate the territorial restriction for foreign banks to operate Renminbi (RMB) business in China, and remove the restriction immediately after WTO accession in the following cities, i.e., Shanghai , Shenzhen, Tianjin and Dalian; within 1 year of WTO accession, the restrictions in Guangzhou, Qingdao, Nanjing and Wuhan will be canceled; within 2 years of WTO accession, the restrictions in Jinan, Fuzhou, Chengdu and Chongqing will be canceled; within 3 years of WTO accession, the restrictions in Beijing, Zhuhai, Xiamen and Kunming will be canceled; within 4 years of WTO accession, the restrictions in Xi'an, Shenyang, Ningbo and Shantou will be canceled, and within 5 years of WTO accession, the Remove all geographical restrictions, foreign banks can bloom everywhere by then.
2. Remove customer restrictions on foreign banks operating RMB business in China. Within 2 years of WTO accession, foreign banks will be allowed to provide RMB business services to Chinese enterprises, i.e., liberalization of RMB wholesale business; within 5 years of WTO accession, foreign banks will be allowed to provide RMB business services to Chinese residents, i.e., liberalization of RMB retail business.
Countermeasures: the existing governance structure of state-owned commercial banks to transform; improve the operating environment of state-owned commercial banks; as soon as possible to formulate the Foreign Banks Law.
Timetable for market liberalization in commercial services
Wholesale services: foreign investors are allowed to take majority stakes in joint ventures by January 2001, when geographic or quantitative restrictions will be lifted; restrictions on the stakes and forms of enterprises will be lifted by 2003; and foreign investors will be permitted to have controlling stakes by January 2002. Joint ventures are allowed in all provincial capitals, Chongqing and Ningbo.
Retail services: after WTO accession, joint ventures are permitted in five special economic zones, as well as in Beijing, Shanghai, Tianjin, Guangzhou, Dalian, Qingdao, Zhengzhou, and Wuhan; four joint venture retail enterprises are allowed to be set up in Beijing and Shanghai, and a maximum of two joint ventures can be set up elsewhere; two of Beijing's joint ventures are allowed to open outlets within the city; all restrictions on geography, number, and form of enterprise shareholding are removed until January 2003; all restrictions on geography, number, and percentage of foreign ownership; department stores with more than 20,000 square meters and chain stores with more than 30 outlets are still allowed to be operated by joint ventures in which foreign investors hold less than 50 percent of the equity.
Countermeasures: State-owned retail industry should develop unified purchase and distribution, chain operation; joint venture retail investment focus on small and medium-sized cities, adjust the investment ratio of different business formats.
The timetable for liberalization of the tourism industry
Travel agencies will be allowed to have a majority stake in joint venture travel agencies within three years of WTO accession, and foreign countries will be allowed to set up wholly-owned travel agencies within six years, and geographic restrictions and limitations on the establishment of branches will be lifted; the hotel industry will be allowed to have a majority stake in joint venture hotels after accession to the WTO, with no further limitations on access within four years, and can be wholly owned by foreign investors.
China's telecommunications services liberalization timetable
WTO accession within one year, the initial opening of network services (mainly ISPs); accession to the WTO in the second year, the gradual liberalization of value-added services geographic restrictions, with a focus on mobile communications, wireless paging, Internet services; accession to the WTO in the third year, the wireline network and fiber optic cables began to liberalize the full abolition of value-added services geographic restrictions. Eliminate tariff restrictions on semiconductors, computers, computer equipment, telecommunication equipment and other high-tech products; in the fourth year of WTO accession, allow foreign ownership in basic telecommunication to be gradually increased from 25% at the initial stage of liberalization to 49%; in the field of value-added telecommunication services such as paging business and data compression and forwarding, the proportion of foreign ownership will be gradually increased from 30% at the initial stage of liberalization to less than 50%; in the fifth year of WTO accession, gradually eliminate In the fifth year of WTO accession, gradually abolish the territorial restrictions on foreign investment in the import of pagers and cell phones, as well as domestic fixed network telephone services. The liberalization of network services was completed; in the 6th year of WTO accession, the cable network and fiber optic cables were fully liberalized. The traditional monopoly pattern of China's telecommunication service industry was basically broken, and a competitive market was formed.
Countermeasures: selective establishment of regional telecommunication alliance; institutional innovation, etc.
(The above content and data are for reference only, if there is any discrepancy, please refer to the commitments announced by the Ministry of Foreign Trade and Economic Cooperation on Dec. 11)
China became a full member of the World Trade Organization (WTO) on December 11, 2001. The Chinese government began to exercise the rights of a full member of the WTO, including the enjoyment of most-favored-nation treatment and national treatment, etc., and at the same time, it will also assume the relevant obligations of a full member of the WTO, including the removal of some restrictions and the opening up of some economic areas in accordance with the schedule for WTO accession.
According to China's previously announced WTO accession commitments, the provisions to be implemented from December 11, 2001 include:
Banking and insurance industry:
The Chinese government will remove restrictions on the service targets of foreign-funded financial institutions' foreign exchange business on December 11th. The service targets of foreign-funded financial institutions' foreign exchange business can be expanded to all units and individuals in China, but they must increase their working capital or capitalization accordingly, and replace their financial business license or financial business corporate license.
From Dec. 11, foreign financial institutions based in Shanghai and Shenzhen are allowed to formally operate renminbi business, and foreign financial institutions based in Tianjin and Dalian can apply to operate renminbi business.
From Dec. 11, foreign-funded non-banking financial institutions can apply for the establishment of wholly-owned or joint-venture automobile financial service companies to handle automobile consumer credit business in accordance with the provisions of the relevant administrative measures to be announced by the People's Bank of China.
From Dec. 11, foreign investors can apply for the establishment of wholly-owned or joint venture financial leasing companies to provide financial leasing services in accordance with the provisions of the Measures for the Administration of Financial Leasing Companies to be announced by the People's Bank of China. The People's Bank of China will accept all applications from foreign-funded financial institutions in accordance with the revised Regulations of the People's Republic of China on the Administration of Foreign-funded Financial Institutions and the Implementing Rules of the Regulations of the People's Republic of China on the Administration of Foreign-funded Financial Institutions, and other relevant administrative measures. Applications for the establishment of institutions, etc., already submitted by foreign-funded financial institutions to the People's Bank of China are still valid, but the applicants are required to supplement the application materials in accordance with the provisions of the amended regulations.
In addition, foreign non-life insurance companies will be allowed to set up branches or joint ventures in China, and the foreign equity ratio of the joint ventures can reach 51%; foreign life insurance companies will be allowed to set up joint ventures in China, with a foreign equity ratio of not more than 50%, and the foreign party can freely choose the joint venture partners, and the investors of the joint ventures can freely enter into the terms and conditions of the joint ventures as long as they fall within the scope of the commitments made in the concession form; for the foreign insurance brokerage companies, the joint venture insurance brokerage companies will be allowed to establish a branch or joint venture in China, and the foreign investors will be allowed to enter into the terms and conditions of the joint venture in China as long as they fall within the scope of the commitments made in the concession form. As for foreign insurance brokerage companies, the foreign equity ratio of a joint venture insurance brokerage company can reach 50%.
Foreign life and non-life insurance companies provide services in Shanghai, Guangzhou, Dalian, Shenzhen and Foshan.
Foreign non-life insurance companies engage in "umbrella policies" and large-scale commercial insurance without territorial restrictions; foreign non-life insurance companies provide non-life insurance services to foreign enterprises, property insurance, liability insurance and credit insurance services related to foreign-invested enterprises in China; foreign (re)insurance companies provide life and non-life reinsurance business in the form of branch offices, joint ventures, or wholly-owned subsidiaries, with no territorial restrictions or business licenses. There are no geographical restrictions or limitations on the number of business licenses issued.
There is no economic needs test (i.e. quantitative limit) on the issuance of business licenses for insurance companies.
National treatment will be applied to insurance "umbrella policy" brokers. Foreign-funded insurance brokers will be allowed to conduct business within the territorial boundaries of Shanghai, Guangzhou, Dalian, Shenzhen and Foshan.
Retail services:
Sino-foreign joint ventures can be set up in five special economic zones, as well as in Beijing, Shanghai, Tianjin, Guangzhou, Dalian, Qingdao, Zhengzhou and Wuhan.
Telecommunications:
Value-added services (including Internet services) and paging business, Shanghai, Guangzhou and Beijing allow joint ventures with a minority of 30% foreign ownership.
Mobile voice and data services, joint ventures with a minority (25%) foreign stake are allowed to operate in Shanghai, Guangzhou, Beijing and between these cities.
Asset management business:
Joint ventures with a minority (33%) foreign stake can engage in domestic securities investment fund management business.
Foreign parties may take a majority stake in a joint venture management consulting company.
Accounting:
Foreigners who have passed China's certified public accountant qualification exam will be given national treatment, meaning they can partner or merge to set up accounting firms; already existing joint ventures are not limited to hiring accountants who hold China's certified public accountant license.
Construction:
Foreign investors can take a majority stake in construction joint ventures.
Tourism:
Foreign investors can take majority stakes in Sino-foreign joint venture hotels, with unrestricted access for four years and wholly owned by foreign investors.
China's WTO Accession Commitments
China's accession to the World Trade Organization (WTO) made commitments in four areas, namely, tariff reductions, reduction and elimination of non-tariff barriers, commitments in agriculture, and opening up of the service sector.
In terms of lowering tariffs, China has committed itself to reducing the average tariff level of 15 percent to 10 percent by 2005. The reduction of tariffs is a necessity of China's reform and opening up, a kind of "remedial lesson" for its accession to the World Trade Organization, and also a trend of globalization of production.
In the reduction and elimination of non-tariff barriers, that is, import quotas, licenses, China's commitment: by 2005, the total elimination of 400 types of import quotas. Because in 2005, members of the World Trade Organization are to abolish import quotas licenses, China's commitment to abolish should also be.
In the area of agriculture, according to the Sino-US agricultural cooperation agreement reached between China and the US, China has committed to: lifting the ban on TCK wheat exports to seven states in the US; liberalizing the exports of more than 6,000 meat processing plants from the US to China, and so on.
In the service sector, China has committed to: gradually liberalize the market for services such as banking, insurance, tourism and telecommunications.
List of industries liberalized after China's accession to the WTO
Banking: According to its WTO accession commitments, the Chinese government will today lift restrictions on the service targets of foreign-funded financial institutions in foreign exchange business. The service targets of foreign-funded financial institutions' foreign exchange business can be expanded to all units and individuals in China, but they must increase their working capital or capitalization accordingly, and replace their financial business license or legal person license for financial business.
Insurance: The Chinese government will allow foreign non-life insurance companies to set up branches or joint ventures in China from today, and the foreign equity ratio of the joint ventures can reach 51%; foreign life insurance companies to set up joint ventures in China, and the foreign equity ratio will not exceed 50%, and the foreign party can freely choose the joint venture partners, and the investors of the joint ventures can freely enter into the terms of the joint ventures as long as they are within the scope of the commitments made in the concessions table; foreign insurance brokerage companies can be expanded to cover all units and individuals in China, but must correspondingly increase the working capital or capital to replace the financial business license or legal person license for financial business. As for foreign insurance brokers, the foreign equity ratio of joint venture insurance brokers can reach 50%.
Telecommunications: Two laws and regulations restricting foreign investment in China's telecom industry were scrapped today. They are the Interim Measures for the Administration of Approval for Engaging in Liberalized Telecommunications Businesses and the Interim Provisions on the Administration of the Liberalized Telecommunications Business Market. Starting today, for value-added services (including Internet services) and paging services, joint ventures in Shanghai, Guangzhou and Beijing are allowed to have a minority of 30% foreign ownership. For mobile voice and data services, joint ventures with a minority?25 percent foreign stake can operate in Shanghai, Guangzhou and Beijing and between those cities.
Construction: From today the construction industry will allow foreign companies to set up joint ventures and cooperative enterprises in China and start enjoying national treatment within three years, and within three years foreigners will start being allowed to set up wholly-owned enterprises, real estate development enterprises in addition to high-grade real estate projects? High-grade hotels, high-grade apartments, golf courses, etc. are not allowed to foreign wholly-owned, there is no restriction on other projects. Retail services: Chinese-foreign joint ventures can be established in five special economic zones, as well as in Beijing, Shanghai, Tianjin, Guangzhou, Dalian, Qingdao, Zhengzhou and Wuhan.
Accounting: Foreigners who have passed China's Certified Public Accountant (CPA) qualification exam will be given national treatment, i.e., they can partner or merge to set up accounting firms; existing joint ventures are not limited to hiring accountants who hold China's CPA license.
Progress of liberalization of key industries in China after 3 years of WTO accession
According to WTO accession commitments, China's total tariff level will be lowered to 10.1 percent in 2005, with average tariffs on industrial products reduced to 9.3 percent and on agricultural products to 15.6 percent; all non-tariff measures will be eliminated; and the transition period enjoyed by important service sectors such as banking, securities, insurance, and distribution will be be phased out.
Automobiles: On January 1, 2005, China will abolish quotas and licenses for automobiles, and tariffs on automobiles will be lowered to 30 percent, and tariffs on auto parts will be lowered to 13 percent; on July 1, 2006, tariffs on automobiles will be lowered to 25 percent, and average tariffs on parts will be lowered to 10 percent. Agriculture: In 2005, China's agricultural tariff level will be reduced to 15.35 percent, the number of tariff quotas reached the highest point, of which the amount of wheat and corn tariff quotas reached 10.7 percent and 6 percent of domestic production.
Banking: Three years after WTO accession, China will open up renminbi (RMB) business to foreign banks in cities such as Kunming, Beijing and Xiamen. 2006 will see the lifting of restrictions on the ownership, operation and establishment of foreign-funded banks, including restrictions on branching and licensing, to allow foreign banks to offer RMB business to Chinese customers.
Securities: Since its accession to the WTO, China has allowed foreign service providers to set up companies to engage in domestic securities investment fund management business, with up to 33% foreign investment. Within three years of WTO accession, foreign investment can be increased to 49 percent. Foreign securities companies are allowed to set up joint ventures with foreign investors owning no more than one-third of the minority stake, which can engage in the underwriting of A-shares, the underwriting and trading of B-shares and H-shares, as well as government and corporate bonds, and the launching of funds.
Insurance: After 2005, China will remove geographical restrictions on insurance business, allow foreign insurers to provide health insurance, group insurance and pension/annuity services, abolish mandatory reinsurance requirements for reinsurance, lower total asset requirements for foreign brokers and allow the establishment of wholly-owned insurance brokers.
Telecommunications: in the area of personal communication services, since the time of accession to the WTO, foreign service providers are allowed to set up joint ventures in Shanghai, Guangzhou and Beijing and provide services within and between these cities, with no more than 25% of the joint ventures to be foreign-owned; within one year of accession, the geographical area will be expanded to 17 cities, with the proportion of foreign investment not exceeding 35%; after three years of accession to the WTO, the proportion of foreign investment will be no more than 49%. In 2007, China will remove the geographical restriction on basic telecommunication, and foreign shares will be allowed to reach 49%.
Retail services: Within three years of WTO accession, foreign service providers will be allowed to engage in the retailing of medicines, pesticides, agricultural films and refined oil products, and restrictions on franchising, as well as wholesaling or retailing of services without a fixed location, will be lifted. In addition to the above areas of trade in services, wholly foreign-owned enterprises will also be allowed to be set up in the construction, tourism and transportation sectors after 2005.