World Trade
Organization RESTRICTED S/FIN/W/42
17 November 2004
(04-4966) Committee on Trade in Financial Services Original: English

Communication from AUSTRALIA

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 16 November 2004, from the delegation of Australia is being circulated to the Members of the Committee on Trade in Financial Services.
Australia recognises that China’s accession to the WTO and its own economic reform program has instigated a welcome process of liberalisation with a view to greater access for foreign firms across the financial services sector.
Australia understands that the Procedures on the Administration of Foreign Debts of Foreign Capital Banks in the Territory issued on 27 May 2004, in addition to the implementing rules released in June by the State Administration of Foreign Exchange (SAFE), set limitations on the amount of foreign exchange funding foreign banks may acquire from overseas, through the imposition of a quota system.
These new procedures, combined with the provisions contained in Article 30 of the Administrative Regulations on Foreign Invested Financial Institutions, which sets a 70 per cent limit on foreign bank holdings of foreign currency deposits, will increase costs and restrict the market access of foreign banks, particularly those with smaller operations in China.