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[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H. Res. 552 Introduced in House (IH)]

110th CONGRESS
  1st Session
H. RES. 552

 Calling on the Government of the People's Republic of China to remove 
 barriers to United States financial services firms doing business in 
                                 China.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             July 17, 2007

Mr. Marshall (for himself, Mr. Roskam, Mr. Frank of Massachusetts, and 
 Mr. Bachus) submitted the following resolution; which was referred to 
                  the Committee on Financial Services

_______________________________________________________________________

                               RESOLUTION

 
 Calling on the Government of the People's Republic of China to remove 
 barriers to United States financial services firms doing business in 
                                 China.

Whereas well-functioning financial markets in China capable of accurately 
        pricing risk, valuing assets, allocating capital to its most efficient 
        use, providing financial products that allow savers to obtain a market 
        rate of return, and capable of intermediating efficiently between savers 
        and borrowers are essential if China is to move successfully to a 
        market-based economy;
Whereas the lack of diversification and innovation among Chinese financial 
        firms, particularly state-owned banks, limits the financial assets in 
        which the Chinese people can invest and limits their access to savings 
        and investment vehicles that would allow them to save safely and 
        adequately for retirement and insure themselves against risks to health 
        and incomes;
Whereas the current lack of well-functioning financial markets in China has the 
        effect of misallocating capital and distorting investment in ways that 
        subsidize capital intensive industries in China's manufacturing sector 
        and distort trade with the United States and other trading partners as a 
        consequence;
Whereas an increased presence of United States and other foreign financial 
        services firms in China would provide substantial benefit to China by 
        aiding in the reform and development of the banking, insurance, asset 
        management, and securities industries and providing new products to 
        Chinese consumers that would contribute substantially to their financial 
        security;
Whereas the United States trade deficit with China in 2006 was $233,000,000,000, 
        and this trade deficit has nearly tripled in size since China joined the 
        World Trade Organization in 2001;
Whereas the United States financial services sector is a leading source of 
        United States exports globally and has the potential to be a major 
        exporter to China;
Whereas the United States maintains open and nondiscriminatory standards for 
        trade in financial services, while China continues to protect large 
        segments of its financial services markets from foreign trade;
Whereas China's World Trade Organization commitments fail to achieve an open and 
        nondiscriminatory environment for foreign financial services firms 
        seeking to trade with China;
Whereas China is one of the few remaining major emerging market countries that 
        maintains limitations on foreign ownership of financial services firms;
Whereas foreign ownership restrictions severely limit United States firms' 
        ability to operate in China across the financial services sector, such 
        that United States and other foreign firms are not permitted to own more 
        than a 49 percent stake in a Chinese asset management firm, a 20 percent 
        stake in a Chinese bank, a 33 percent stake in a Chinese securities 
        firm, a 24.9 percent stake in a Chinese insurance company, and a 50 
        percent stake in a life insurance joint venture;
Whereas foreign entities are not permitted to invest in Chinese A-share 
        securities markets except through an onerous licensing and quota system 
        for ``qualified foreign institutional investors,'' and Chinese 
        institutional investors are also restricted in investing in foreign 
        securities markets except through a licensing and quota system for 
        ``qualified domestic institutional investors'';
Whereas the government of China has failed to meet its World Trade Organization 
        commitment on licensing of foreign broker-dealers and maintains 
        discriminatory restrictions on the scope of business of foreign 
        securities firms;
Whereas the government of China maintains discriminatory standards for foreign 
        banks in terms of capital requirements, restrictions on corporate 
        operational form, and restrictions on bank branches, and has been slow 
        to act on foreign banks' applications;
Whereas the government of China has approved no new enterprise annuities 
        licenses for United States or other foreign firms since 2005 and 
        maintains a cumbersome multi-agency process for approval of licenses;
Whereas the government of China maintains discriminatory practices for branch 
        applications from foreign-invested life insurers, granting branch 
        approvals slowly and consecutively, while domestic insurers receive 
        concurrent approvals to open multiple branches;
Whereas major Chinese financial institutions have sought licenses to operate in 
        the United States on the grounds that Chinese financial regulators 
        satisfy consolidated supervision standards, at the same time the Chinese 
        government restricts access to United States and other foreign firms on 
        grounds that suggest that Chinese regulators may not satisfy these 
        standards; and
Whereas the Secretary of the Treasury has initiated the Strategic Economic 
        Dialogue as a forum in which to engage Chinese officials on economic 
        reform issues, including financial market issues: Now, therefore, be it
    Resolved, That it is the sense of the House of Representatives 
that--
            (1) the Government of the People's Republic of China should 
        immediately implement all of its World Trade Organization 
        commitments to date in financial services;
            (2) the Government of the People's Republic of China should 
        immediately implement all of its commitments to date made under 
        the auspices of the Strategic Economic Dialogue initiated by 
        the Secretary of the Treasury;
            (3) the goals of the United States for the next meeting of 
        the Strategic Economic Dialogue should be to achieve Chinese 
        commitments toward--
                    (A) removal of all foreign investment ownership 
                caps on banking, life insurance, asset management, and 
                securities;
                    (B) nondiscriminatory treatment of United States 
                financial services firms (including banking, insurer, 
                insurance intermediary, asset management, and 
                securities firms) with regard to licensing, corporate 
                form, and permitted products and services; and
                    (C) nondiscriminatory treatment of United States 
                financial services firms with regard to regulation and 
                supervision; and
            (4) United States financial service regulators, in 
        assessing whether applications from Chinese financial 
        institutions meet comprehensive consolidated supervision 
        standards, should consider whether the applications are for 
        operations and activities in the United States that are 
        currently prohibited for United States financial institutions 
        in China, and the extent to which such prohibitions reflect 
        problems with the quality of home country supervision.
                                 <all>
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