China's Accession to the WTO and It's Financial Service Trade

Abstract: The article discusses the impact of China's WTO entry on its financial service trade. It places emphasis on analyzing China's banking and securities sector, and discuss the challenges the financial sector will face after China's accession to the WTO as well as related suggestions and countermeasures.

Key Words: WTO; financial service trade; banking industry; securities industry.

Preface:
Financial Service Trade, as a major topic in service trade negotiation, has attracted increasingly close attention from all country in the world. Financial service has a bearing on a country's fundamental political and economic targets such as economic development and social stability. Every country, therefore, has formulated various laws, regulations and administrative rules governing the management of its own financial business. How to deal with the similarities and differences of these laws, regulations and administrative rules of various countries has been the focus of attention of all WTO member nations. In accordance with the international practice that a country's domestic laws should be respected, a member nation should recognize the prudent measures adopted by other member nations to manage the obligations of market access under the prerequisite that their existing situation of financial service management should be maintained. The level of international financial openness, as a matter of fact, goes down to the level of efforts by all countries to protect their own financial industry through financial service trade barriers.

Since China began its reform and opening drive, the financial industry has made certain progress in both development and adaptation to international practice, It is, however, still facing great challenges in joining WTO and integrating into economic globalization.

"Globalization is a historic trend that you cannot avoid. Your only choice is to participate. " Vice-Foreign Trade Minister Long Yongtu said.

China is determined to be a part of the globalizing world economy, and the country's accession to the World Trade Organization (WTO) will be the first step in that process.

China's agreement with the US, namely, the China-America deal has paved the way for China's admission to the WTO, after 13 years of trying, through quite a few matters have to be tied up first. Nonetheless, people are already looking beyond the accession process and asking: "How will China membership affect businesses ?" China's specific market access commitments will have a dramatic effect on individual sectors of the economy ranging from agriculture to financial services. We, here, will discuss the impact of China's WTO entry on its financial service trade, of which the banking and securities sectors are in particular analysed.

Financial Service Trade
1. Banking Industry
General China's banking sector
Provisions
The expansion of foreign banks in China
Positive influence of entering the WTO .
The critical situation.
Countermeasures up to date
2. Securities Industry
Provisions
The influence
Online Brokerage Legislation

Conclusion
As to how fast China's financial service industry should open to the outside world, it depends on many factors, such as the level of economic development, financial system reform, improvements in financial laws and regulations, the level of government regulation over the financial over the financial industry, the management level and competitive power of the world economy and international financial market, as well as their relations with China, etc. Therefore, China should but proceed in an orderly way and step by step in opening its financial service industry. On the one hand, we should choose and introduce in to Chinese market foreign financial institutions that have a long history and creditworthiness and are really necessary to China, while making sure that those with potential risks, be allowed to enter; on the other, we should have an objective view of China's reality and be fully aware of the management level and competitive power of Chinese financial institutions. In expending the scope of business and customers of foreign financial institutions, we should carry out experiment in order and step by step, actively push forward financial system reform, and improve the transparency, efficiency and competitiveness of the financial system, because they form the foundation for integrating into financial globalization. With the opening to the outside world, China's financial service industry will be getting closer to the requirements of the Agreement on Service Trade and Financial Service Agreement.

Reference:
1. "The WTO and China's Financial Business", China's Foreign Trade, 10/1999, P21-P22.
2. "The WTO, foreign stock brokerages and PRC stocks", International Financial Law Review, 9/2000, P51-53.

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