China defended new rules allowing foreign banks into the lucrative retail banking market, with officials saying yesterday that the regulations' stringent requirements would meet Beijing's promises on opening the long-protected sector to foreign competition.
The rules, released late on Wednesday but circulated among industry executives for months, require foreign banks to incorporate locally if they want to offer local-currency services to individual Chinese.
Beyond that, foreign banks must put up 1 billion yuan (US$120 million) for the incorporated bank and set aside 100 million yuan for each branch.
The rules, which take effect on Dec. 11, are designed to fulfill one of the last commitments China made when it entered the WTO five years ago: to open its banking sector.
Foreign banking executives, however, have complained that the high capitalization and other requirements will slow their ability to set up extensive branch networks.
Officials involved in drafting the regulations rejected that criticism, saying the measures are consistent with international practice and give foreign banks equal treatment with Chinese competitors.
The requirements are "necessary to safeguard the security of China's financial system and to protect the interests of Chinese depositors," Song Dahan (
"In a nutshell, these regulations have demonstrated the Chinese government's consistent pursuit of the opening-up policy and its seriousness in meeting WTO commitments," Song said.
For more than a decade, major foreign banks have yearned to serve ordinary Chinese, who are prodigious savers, salting away about a quarter of their incomes.
But China's commercial banking industry is notoriously weak, with mismanagement saddling them with high rates of bad loans and making the government reluctant to allow unfettered foreign competition.
Under current regulations, foreign banks can handle loans and deposits in foreign currencies, but they can provide services in the yuan only to enterprises in 25 cities. Foreign banks were allowed to run their China branches from their overseas headquarters.
The new regulations drop the geographical restrictions and allow services to ordinary Chinese as well as enterprises.
The new regime is not expected to impede global retail banking giants, such as Citigroup and HSBC Holdings, which have been setting up branches in anticipation of the opening and which have deep pockets to fund the expensive expansions, bankers and analysts said.
"We believe that local incorporation will enable us to further expand our network and service range, in particular our RMB [renminbi] financing ability, for the benefit of our customers in the China market," Richard Yorke, head of HSBC's China business, said in a statement.
However, smaller foreign banks unwilling to commit large amounts of capital, are likely to be affected.
Under the new rules, foreign banks that choose not to incorporate in China are allowed only to accept term deposits of at least 1 million yuan, effectively restricting their services to all but the wealthiest Chinese residents.
That condition, regulators suggested, went even further than the WTO required.
"This is not a restriction to some extent," Wang Zhaoxing (王兆星), assistant chairman of the China Banking Regulatory Commission, told reporters.
`This can be regarded as preferential treatment," Wang said.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique