. /.  RESTRICTED  WORLD TRADE  
ORGANIZATION  S/FIN/W/52 
11 October 2006 
 (06-4884) 
Committee on Trade in Financial Services Original:   English 
  
 
 
COMMUNICATION FROM THE EUROPEAN COMMUNITIES 
 
Transitional Review Mechanism Pursuant to Paragraph 18 of the Protocol of 
 
Accession of the People's Republic of China ("China")  
 
    The following communication, dated 10 October 2006, from the delegation of the European 
Communities is being circulated to the Members of the Committee on Trade in Financial Services. 
 
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1. The EC is transmitting comments and questions in advance of the meeting of the Committee 
on Trade in Financial Services of 27 November 2006, in order for the Chinese authorities to have 
sufficient time to provide complete replies. 
2. Once the information to be provided by Ch ina in accordance with paragraph 8 and 
paragraph IV.3(a) of Annex 1A of its Accession Prot ocol has been received, the EC might come back 
with additional questions. 
3. The EC welcomes the further expansion of ge ographical scope for foreign-funded financial 
institutions, as announced at last year's TRM, as well as the further reduction in capital requirements 
for foreign bank branches, both at the end of 2005. 
4. Minimum working capital requirements for direct  branches of foreign banks remain however 
extremely high, ranging from RMB 100 million to  RMB 400 million per branch depending on the 
business scope.  These requirements are much higher  than minimum capital requirements in most 
other countries and effectively limit market access for fo reign banks.  At last year's TRM, China said 
it would continue to adjust the operational capita l requirement in the future based upon prudential 
principles. 
 Considering the still extremely high level of capital requirements, could China please 
indicate when it intends to further redu ce minimum capital requirements for branches? 
5. In its responses to last year's TRM, China said that after the transitional period it would open 
up its overall banking sector, and that it would consid er how to apply the working capital requirement 
to the overall commercial presence of a foreign-funded bank in China. 
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   Could China please provide some further info rmation on its plans to apply the working 
capital requirement to the overall commercial presence of a foreign-funded bank in 
China? 
6. China has made full national treatment commitments in banking sub-sector (k) Provision and 
transfer of financial information, and financial dat a processing and related software by suppliers of 
other financial services .  China's regulatory regime in this subsector is, however , applied only to 
foreign suppliers, and the current regulator appears to be engaged in compe tition with other suppliers. 
 In light of China's national treatment commitments and the potential for conflicts of 
interest, would China be open to considering alternative supervisory approaches covering both domestic and foreign suppliers, e.g. having the sub sector supervised by a 
financial services regulator? 
7. On Sunday, 10 September 2006, China published a new set of restrictive regulations for 
foreign news agencies.  
Could China please clarify whether this new regulatory regime will also apply to 
suppliers of financial information, and, if y es, how this reconciles with China's full WTO 
commitments for suppliers of financial information services? 
 
8. Foreign insurance companies in China face difficulties to expand their operations 
geographically through branches and sub-branches,  mostly due to cumbersome and unpredictable 
licensing conditions.  Chinese insurance companie s do not seem to experience such problems in 
obtaining licenses, including obtaining concurrent approvals to open multiple branches. 
 Could China confirm that domestic and foreign insurance companies have equal 
treatment with regard to branch/sub-branch licensing?  Could China also confirm that 
it implements branch licensing regulations uniformly across China? 
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