. /. RESTRICTED  WORLD TRADE  
ORGANIZATION  S/FIN/W/46 
2 September 2005 
 (05-3835) 
Committee on Trade in Financial Services  Original:   English 
  
 
 
COMMUNICATION FROM JAPAN 
 
Transitional Review Mechanism in connection with Paragraph 18 of 
 
the Protocol on the Accession of the People's Republic of China  
 
 
 The following communication, dated 30 August 2005, from the delegation of Japan is being 
circulated to the Members of the Comm ittee on Trade in Financial Services.   
 
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Questions and Comments of Japan on the Implementation by China 
 
of its Commitments on Trade in Financial Services  
 
 
1. Japan recognizes and welcomes China’s continuous efforts to implement its WTO 
commitments in financial services. Japan believes that liberalization in the financial services sector will not only enhance the efficiency of the sector, bu t also substantially cont ribute to the continued 
growth of the economy. 
2. As Japan pointed out in last year’s comm unication, regulatory transparency as well as 
consistency in implementing regulations is vital fo r China to enjoy the fruit of liberalization. Some 
Japanese non-life insurers operating in China, however , had difficulty in transforming branches into 
local subsidiaries, having experienced delays in the approval process by the Government of China. 
3. In accordance with Paragraph 18 of the Protoc ol on the Accession of the People’s Republic of 
China, which states that “China shall provide releva nt information to each subsidiary body in advance 
of the review”, and in the spirit of cooperation to render the TRM process most efficient and effective, 
Japan requests China to provide in advance of the regular meeting of the Committee on Trade in 
Financial Services responses and relevant inform ation regarding the fo llowing questions and 
comments. 
I. INSURANCE 
4. Please confirm that China will, in accordan ce with its WTO commitments, remove the 
requirement for a cession of all lines of the primary risks for non-life, personal accident and health insurance business with an appoint ed Chinese Reinsurance Company. 
5. In the last TRM, China responded that the authorities would relax the minimum capital 
requirements, depending on the improvement of the risk management system of foreign financial 
institutions and the development of China’s re gulatory framework. Please indicate whether China 
plans to relax the requirement s for insurance companies. S/FIN/W/46 
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 II. BANKING 
6. In relation to the paragraph 5, please indicate whether China plans to relax minimum capital 
requirements for banks. 
7. Please confirm that China will, in accordan ce with its WTO commitments, further relax 
geographical restrictions for foreign banks as already reflected in its revised offer. 
8. Japan understands that one of the licensing requi rements for foreign banks wishing to engage 
in foreign exchange futures trading is that th e amount of currency trading by the bank exceeds 
US$ 20 billion in the previous year.  Please provide a rationale for this requirement. 
9. Please indicate whether China plans to introdu ce flexibility in the re quirement for a newly 
established branch to engage in local currency business. 
10. Please indicate whether China plans to intr oduce flexibility in applying quotas to foreign 
exchange funding. 
 
 
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