Commercial Presence in China

Licensing

• China has agreed to issue licenses solely on the basis of prudential criteria, with no economic needs test or quantitative limits on licenses. By December 11, 2006, any non-prudential measures restricting ownership, operation, and juridical form of foreign financial institutions shall be eliminated.

• To establish a subsidiary of a foreign bank or foreign finance company, a foreign financial institution must have over $10 billion in total assets at the end of the year prior to filing its application.

• To establish a branch of a foreign bank in China, a foreign financial institution must have more than $20 billion in total assets at the end of the year prior to filing its application.

• To establish a Chinese-foreign joint bank or a Chinese-foreign joint finance company, a foreign financial institution must have over $10 billion in total assets at the end of the year prior to filing its application.

• To engage in local currency business (subject to the geographic restrictions listed below), a foreign financial institution must have operated in China for three years and been profitable for two consecutive years prior to filing its application.

• None for foreign currency business 

• Restrictions on local currency business will be phased out as follows: 

 
• Shanghai, Shenzhen, Dalian and Tianjin upon China’s accession to the WTO; 
• Guangzhou, Zhuhai, Qingdao, Nanjing and Wuhan by December 11, 2002; 
• Jinan, Fuzhou, Chengdu and Chongqing by December 11, 2003; 
• Kunming, Beijing, and Xiamen by December 11, 2004;
• Shantou, Ningbo, Shenyang and Xi’an by December 11, 2005. 

• By December 11, 2006, all geographic restrictions will be removed.

• Banking services permitted include acceptance of deposits and other repayable funds from the public, lending of all types, financial leasing, payment and money transmission services, guarantees and commitments, and trading of foreign exchange for own account or that of customers.

• Foreign financial institutions may provide foreign currency services without client restrictions. They may provide local currency services to Chinese enterprises by December 11, 2003. By December 11, 2006 they may provide local currency services to all Chinese clients. 

• Foreign financial institutions licensed for local currency business in one region of China may service clients in any other region that is open to such business.

• Except for geographic restrictions and client limitations on local currency business, foreign financial institutions may do business without restrictions or the need for case-by-case approval.

• Branches of foreign financial institutions are specifically permitted.

• Non-bank foreign financial institutions may provide auto financing. These services are not subject to market access restrictions and are accorded national treatment.

• The following services are not subject to market access restrictions:  The provision and transfer of financial information, financial data processing, and related software by suppliers of other financial services, advisory, intermediation, and other auxiliary financial services, including credit reference and analysis, investment and portfolio research and advice, and advice on acquisitions and on corporate restructuring and strategy.

• Managers, executives, and specialists of a representative office, branch, or subsidiary in China, temporarily moving as intra-corporate transferees, will be permitted an initial stay of three years.

• Managers, executives, and specialists of foreign-invested enterprises in China will be granted a long-term stay permit as stipulated in the terms of contracts concerned or an initial stay of three years, whichever is shorter.

• Service salespersons who are not based in China, and who meet certain other conditions set out in China’s services schedule, are limited to a 90-day stay.

• China reserves the right to place market access restrictions on the cross-border supply of foreign financial services (including motor vehicle financing by non-bank foreign financial institutions) except for the provision and transfer of financial information, financial data processing, and related software by suppliers of other financial services, as well as advisory, intermediation, and other auxiliary financial services.

• The conditions of ownership, operation, and scope of activities for an existing foreign service supplier, as set out in the supplier’s contract or shareholders’ agreement or in a  license establishing or authorizing the supplier’s operation or supply of services, will not be made more restrictive than they were on December 11, 2001.

• Foreign financial leasing corporations will be permitted to provide financial leasing service at the same time as domestic corporations.