Banking services

China will gradually abolish restrictions imposed on the operations of foreign banks in China. These will be allowed to offer renminbi banking services to Chinese corporations on 11 December 2003 and to Chinese individuals on 11 December 2006. As of the latter date, China will also issue banking licences solely on the basis of prudential criteria, without quantitative limits on licences and restrictions on ownership, operation and juridical form of foreign banks. There are no more geographic restrictions for foreign currency business, and geographic restrictions on local currency business will be phased out by 11 December 2006 (with additional areas opening up each year).

A new regulation introduced by the Chinese authorities since accession will make the practical consequences of these undertakings less effective. According to this regulation foreign banks would be allowed to open only one new branch per year. This will make it difficult for foreign banks to gain market share and the WTO compatibility of this measure is doubtful.