China should concentrate on transparency in reforming its financial legal system, a group of senior officials and experts have agreed.
Consistent rules and a standard framework in the sector are vital to first attract then safeguard the interests of foreigners coming into the Chinese market, said Wang Yi, vice-president of the China Development Bank (CBD).
Accounting, banking and security companies will all be affected.
The changes should increase business confidence in a fair, transparent and open market environment.
"These laws and regulations should give all the market participants, including foreign players and domestic participants, national treatment,'' said Huang Yi, a senior official with the central People's Bank of China.
"The government should also withdraw from direct control and too much intervention over market activities as soon as possible,'' said Wang, addressing an audience from the financial and academic sectors on Saturday at the First Forum on Financial Laws.
Foreign financial institutions have currently set up more than 400 branches in China, but very few of them have been able to make profits because of the limited number of business areas they are allowed to develop in. Consequently a number of them have withdrawn their business from China.
At the same time, domestic private companies and individuals are not licensed to carry out financial business such as insurance in China.
China's imminent entry into the WTO means that 45 Chinese laws and regulations will have to be revised, among which nine concern financial sectors, such as the Commercial Bank Law, the Insurance Law and the Securities Law.
The laws are necessary to ensure businesses play on a level playing field in entering the market alongside State-owned or State-controlled enterprises.
Zhu Chongshi, vice-president of Xiamen University, also said changes to investment fund law and evaluation law should be speeded up.
Another plan under consideration is a savings insurance system which would ensure all deposits can safely be withdrawn by customers if the commercial bank goes bankrupt.
Speaking at a forum hosted by Peking University on Saturday, Huang said the draft of the deposit insurance system has been revised many times in the past three years, but was still waiting for a final go-ahead from the authorities.
Members of the forum also called for the financial market to be opened up to domestic private companies.
The four main State-owned commercial banks should also be given tax relief to put them on the same footing as foreign rivals, Wang said.
To compete better with the conglomerate of foreign rivals expected to flow into the fledging China market after WTO accession, Wang suggests that five tycoon financial shareholding groups be set up on the bases of the four big commercial banks and CDB.
"The development of these five conglomerate enterprises would be an important move to strengthen the competitive edge of domestic financial enterprises,'' said Wang.
(China Daily May 28, 2001)
