. /.  WORLD TRADE  
ORGANIZATION  RESTRICTED 
S/FIN/W/79 
3 October 2011  
 
(11-4808) 
Committee on Trade in Financial Services Original:   English 
  
 
COMMUNICATION FROM JAPAN 
 
Transitional Review Mechanism pursuant to Paragraph 18 of 
the Protocol of Accession of the People’s Republic of China 
 
 
 The following communication, dated 3 Octobe r 2011, 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 from Japan on the Implementation by China 
of its Commitments on Trade in Financial Services 
 
1. Japan recognizes and welcomes China's con tinuous efforts over the past ten years to 
implement its WTO commitments for financial servi ces.  Japan believes that liberalisation in the 
financial services sector will not only enhance the e fficiency of the sector but also contribute to 
China's overall economic growth.  In this context, Jap an continues to encourage China to make further 
efforts to ensure regulatory transparency, incl uding on the establishment of a commercial presence, 
thus maximising the benefits of liberalisation.  Japan is of the view that there is still room for further 
improvements in this area in view of China’s comm itment to transparency as described in the Report 
of the Working Party on the Accession of China. 
2. In accordance with paragraph 18 of the Protocol  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 a spirit of co-operation to render the TRM process most efficient and effective, 
Japan requests that China provide, in advance of the regular meeting of the Committee on Trade in 
Financial Services, responses to and relevant information about the following questions and 
comments. 
I. INSURANCE 
A. TRANSPARENCY FOR THE ESTABLISHM ENT OF A COMMERCIAL PRESENCE  
3. According to China's schedule of specific commitments (7. Financial Services A. All 
Insurance and Insurance-Related Services, (3) D.  Licenses), "upon accession,  licenses will be issued 
with no economic needs test or quantitative limits  on licenses".  Japan would like China to explain 
how this can be implemented unde r relevant domestic laws or regulations and present any specific 
issues/problems to be solved, if an y, regarding the application.   
B. TRAINING AND EXAMINATION FOR SENIOR  STAFF OF INSURANCE COMPANIES  
4. The Provisional Regulations on Administration of Training of Board Members, Auditors and 
Senior Management Staff of Insurance Corporations  require training and an examination for senior S/FIN/W/79 
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  staff of insurance companies, and provide detaile d stipulations as to the frequency and minimum 
training period, depending on the various levels of  senior staff.  Japan understands that foreign 
insurance companies have been suffering from signifi cant burdens which may affect their day-to-day 
operations.  Moreover, while there is no specific st ipulation about the language of the training and the 
examination, in the event that th e language is limited to Chinese, it would be an excessive burden to 
non-Chinese staff of foreign-funded insurance comp anies.  Japan would like China to provide 
information as to whether China is willing to flex ibly implement the regulations for foreign-funded 
insurance companies, especially regarding language fo r the training and the examination, by allowing 
them to be conducted in English, Jap anese or through an interpreter.  
C. L
IBERALISATION OF THE STAT UTORY INSURANCE BUSINESS  
5. Japan understands that the statutory insuran ce business, such as automobile third-party 
liability insurance, has not been opened to foreign in surance companies, but that China is considering 
the liberalisation of the business in  the near future.  Japan would like China to provide details of the 
progress made and to present any specific issu es/problems to be solved in the future. 
II. BANKING   
A. LIMITATION ON FOREIGN FINANCIAL INSTITUTIONS  
6. Japan understands that the percentage of equ ity investment of a single overseas financial 
institution in a Chinese-funded financial institution cannot exceed 20 percent.  Japan would like to 
know how this restriction of foreign equity partic ipation can be justified while China’s schedule of 
commitments for financial services does not stip ulate such a limitation on the foreign equity 
participation in single institutions but provides for the elimination any existing non-prudential 
measures restricting the ownership,  operation, and juridical form of foreign financial institutions 
including on internal branching and licenses within fi ve years.  Japan would like China to confirm the 
future prospects of this policy. 
III. SECURITIES 
7. Japan understands that China raised the quota for Qualified Foreign Institutional Investors 
(QFII), which allows foreign mutual funds to invest in China’s domestic stock markets up to 
30 billion dollars, creating new opportunities for Japa nese mutual funds and money managers.  Japan 
would like China to explain whether there are any plans to further expand the quota for QFII. 
 
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