. /.  RESTRICTED  WORLD TRADE  
ORGANIZATION  S/FIN/W/51 
28 September 2006 
 
 (06-4630) 
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 27 Septem ber 2006, from the delegation of Japan is 
being circulated to the Members of the Committee on Trade in Financial Services. 
 
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Questions and Comments of Japan on the Impl ementation by China of its Commitments on 
Trade in Financial Services 
 1. Japan welcomes China’s continuous efforts to implement its WTO commitments for financial 
services.  Japan believes that liberalization in the financial services sector  will not only enhance the 
efficiency of the sector, but contribute to China’s overall economic growth.  In this context, Japan 
continues to encourage China to make further effort s to ensure regulatory transparency, so that the 
benefits of liberalization will be maximized.  Japan is  of the view that there is still room for further 
improvement, in view of China’s commitment to transparency as described  in the Report of the 
Working Party on the Accession of China. 
2. 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 to the following questions and comments. 
I. INSURANCE 
3. Article 11 of the Administration of Reinsu rance Business Regulations requires direct 
insurance companies to solicit, from at least two reinsurance compani es in China, reinsurance offers, 
the proportion of which must be more than 50 percen t of the reinsurance to be ceded.  Please confirm 
that Article 11 does not require any compulsory cessi ons, and that insurers operating in China are free 
to cede reinsurance abroad, given that no limitatio n is scheduled regarding cross-border trade in 
reinsurance. 
4. Article 22 of the Administration of Reinsura nce Business Regulations prohibits foreign 
insurers from engaging in reinsura nce business with their affiliates.  Please explain how this limitation 
can be justified when no limitation is scheduled regarding cross-border trade in reinsurance. S/FIN/W/51 
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  II. BANKING 
A. F
OREIGN EQUITY CAP 
5. Please explain why China limits foreign equity participation to a maximum of 20 percent for a 
single foreign investor in existing Chinese domestic banks.  This limitation appears to be in conflict 
with China’s schedule of commitments where no lim itations on the foreign e quity participation are 
scheduled. 
B. LOCAL CURRENCY RETAIL BUSINESS  
6. It has been reported that China is planning to re quire foreign banks to be locally incorporated 
if they are to engage in local currency retail business.   Please indicate if China plans to introduce such 
new requirement.  If so, please explain how it can be justified in light of China’s accession 
commitments. 
III. PROVISION AND TRANSFER OF FINANCIAL INFORMATION, AND FINANCIAL 
DATA PROCESSING AND RELATED SOFTWARE BY SUPPLIERS OF OTHER FINANCIAL SERVICES 
7. Article 4 of "Measures for Administering the Re lease of News and Information in China by 
Foreign News Agencies" requires foreign news ag encies to get approval from Xinhua News Agency 
for releasing news and information in China, and prohibits them from directly soliciting subscription 
of their news and information services in China.  Pl ease explain how this can be justified in light of 
China’s national treatment commitments in the fina ncial service sub-sector "provision and transfer of 
financial information and financial data processing and related software by suppliers of other financial 
services". 
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