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After China's accession to the WTO, the Debt Management Challenges and Countermeasures

Author: JiaKang From: www.yourpaper.net Posted: 2007-11-20 22:32:11 Read:
After the reform and opening up, the development of the government bond market in China has gone through the course of 20 years. And compared to the developed Western countries, China's government bond market has two prominent features: All involved in the government bond market investors for domestic investors; funds involved in the government bond market all domestic funds. China's accession to the WTO, with a clear enclosed nature of these two characteristics of the bond market, no doubt will face major challenges, the overall trend is that foreign investment will be a variety of direct or indirect ways and means to enter China's government bond market. What impact how China should take countermeasures, further research is needed.

After accession to the WTO, the prospects for foreign investment into China bond market

(A) the terms of the agreement of the WTO on the financial sector.

The bond market as part of the financial market as a whole, opening up the overall process is closely related to the degree of China's accession to the WTO after the opening up of the financial system as a whole. The terms of the WTO agreement involving the financial sector so far, mainly two parts: financial services trade agreement between China and the United States and the European Union signed the relevant agreement.

1. WTO Financial Services Agreement.

22 agreements of the WTO, the financial industry is "GATS" relevant Terms and accessories and December 13, 1997 signed by the WTO in Geneva, "financial services trade agreement (FSA), by This constitutes a system of legal norms of the WTO financial openness.

"GATS" provides for several important principles:

(1) Market access: Parties in the conditions and treatment of foreign services and service providers to give their commitment to equal treatment set out in the schedule of the obligation to plan.

(2) National Treatment: In accordance with the final agreement of the Uruguay Round, the members of a commitment that voluntary agreement stipulated in the annex, each participant in its territory has been the establishment of institutions of other participants in the financial service providers should be allowed to enter the country by public payment and settlement system operated by institutions or departments, the use of normal commercial channels involved in the supply of official funds to refinance.

(3) transparency: "GATS", a signatory to any negotiations must be measures affecting trade in services relevant laws, executive orders and other decisions, rules and practices (either the central government or local governments to make or developed by non-government the right to be published) in force immediately before the commencement of the regulatory agencies.

(4) the MFN status: fine medical trade General Agreement: The treatment of each contracting party to give the other contracting party service or service provider should immediately and unconditionally to the business of any other contracting party suppliers.

(5) the gradual liberalization: This protective provisions for developing countries to enjoy the special treatment, that is, taking into account the financial sector in developing countries is mostly infant industries, the lack of competitiveness with developed countries, it is allowed a certain period of time the The period of protection. Financial services trade agreement was signed in December 1997, and in early 1999. The 102 WTO members have made a commitment to open markets, 95% of the global trade in financial services along with included in the liberalization process. The signing of the agreement means that the jurisdiction of the WTO has been extended to the financial services industry. Under the agreement, countries allow foreign financial firms established in the country and press run competition principles; foreign companies enjoy the same right to enter the market with domestic companies; cancel the restriction of cross-border services; allow foreign capital investment projects in more than 50% the proportion of . 70 countries (EU agreed to open up to 15 dollars) and regional banks, insurance, securities, financial information market.

2. China and the United States, the European Union signed a bilateral agreement on the terms of the financial sector.

WTO bilateral agreement signed by China and the United States, the European Union in 1999, the opening up of China's financial industry conditions:

(L) the banking industry. After China joined the WTO two years, foreign banks can conduct RMB business dealings with Chinese enterprises. Five years post-admission, foreign banks will be able to conduct RMB business dealings with the Chinese residents. Foreign banks to conduct RMB business with Chinese companies, branch offices without geographical restrictions; five years after the grant national treatment to foreign banks, foreign banks to conduct RMB business without geographical restrictions, to be absorbed by the RMB deposit engaged in retail banking. WTO accession, foreign non-bank financial institutions, automobile consumption credit financing business.

(2) the insurance industry. Allow foreign property and life insurance companies to enter the Chinese market within five years, no geographic restrictions and gradually expand the scope of business of foreign insurers, including life insurance and pension insurance; issued a business license for foreign insurance companies on the basis of the principle of prudence, elimination of quantitative restrictions; within two years, to allow the non-life foreign insurer holds a 51% stake in the insurance institutions and the establishment of a wholly-owned subsidiary bodies; within five years, the foreign stake in the insurance company up to 50%; sixth year the foreign shares more than 50%.

(3) the securities industry. Allow foreign cooperative enterprises involved in fund management, foreign securities companies can underwrite domestic securities involved in the issuance and trading of securities (bonds or equities) denominated in foreign currencies. In three years, foreign investors may hold a 33 percent stake in fund management companies; may be increased to 49% after three years. Foreign brokerages may hold 33% of the shares of securities companies.

(B) of foreign investment into China government bond market.

After China's accession to the WTO, the bond market is self-enclosed state will be broken, and foreign capital to enter China's government bond market will be a variety of ways. Specifically, foreign institutions to enter China's government bond primary market and the secondary market.

1. Treasury bonds a market.

Currently, the National Debt has two varieties: the certificate bonds and book-entry treasury bonds. Certificate bonds by commercial banks underwriting sales to domestic residents through its own outlets; book-entry bonds after Treasury rates or bond prices bid by the primary dealers of government securities in the stock exchange at the venue is listed distributors. After China's accession to the WTO, the government bond primary market will undergo significant changes, mainly in foreign institutions will increasingly become a market participants. From foreign capital to enter a market analysis, the following:

(1) Sino-foreign Cooperation Fund: China's securities regulatory authorities for the development of institutional investors since 1999, have set up a top ten fund management companies, specialize in investing in stocks, bonds and other securities assets. Now, the establishment of Sino-foreign cooperative fund has also been put on the agenda. As part of the portfolio management of the Fund's assets, the national debt will undoubtedly become a major area of ??investment of Sino-foreign cooperative funds.

(2) foreign-invested securities company: China's accession to the WTO to allow foreign ownership of securities companies 33% of the shares. Foreign equity participation securities companies and other domestic securities companies can not only participate in the underwriting of government bonds, and can also participate in the secondary market trading of the national debt.

(3) foreign-invested insurance companies: a domestic insurance company absorb foreign capital, should be entitled to the rights of other insurance companies should enjoy. In order to ensure the preservation and appreciation of the premium income, its main premium investment channels preferred the bond market.

(4) foreign banks: financial services trade agreement, and the agreement signed by China and the United States, the European Union, foreign banks after a specified term of protection, no need to take the joint venture, cooperative manner, you can directly enter China's financial markets. Foreign banks to use government bonds as a flexible means of regulating capital position, directly participate in the underwriting of government bonds a market, and trading in the inter-bank bond market.

2. Treasury bonds secondary market.

Able to participate in the government bond primary market where foreign participants naturally be able to participate in the secondary market for government bonds. In addition, there are two types of foreign holders With China's accession to the WTO, can gradually into government bonds secondary market transactions to:

Previously (1) foreign-funded enterprises: not yet open to foreign investment in the domestic capital market, the number of foreign-funded enterprises the absence of suitable investment channels for stable income, have to take high-low approach to the transfer of profits to the outside, causing serious China's tax revenue loss, it tends to affect China's foreign exchange balance. Treasury bond market open to foreign-funded enterprises will be conducive to the mitigation of the problem.
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