At the critical juncture of the turn of the century, China took a decisive step on its long journey to join the World Trade Organization. For the banking industry, this means that after a period of concessions, China's commercial banking market will be completely open to the world around 2005. At that time, foreign-funded banks (approved by the central bank in accordance with national treatment) can operate any banking business in my country. This is a disturbing fact for China's banking industry, which is still in its infancy. How to strategically guide foreign banks to enter my country's financial market, weaken the impact of "WTO accession", and support the domestic banking industry is an urgent issue.

1. Rational analysis of the development status of foreign-funded banks in my country

Since the introduction of foreign-funded financial institutions in my country in the 1980s, as of the end of 1998, those with the approval of the State Council can establish commercial banks Foreign financial service institutions have branches in 24 cities. my country has officially approved 172 foreign banks in China. Among them, there are 153 foreign bank branches, 7 Sino-foreign joint venture banks, 6 wholly-owned banks, and 6 foreign-funded and joint venture financial companies. Except for RMB business, almost all businesses in the financial field have been opened to foreign financial institutions. In fact, foreign financial institutions operating RMB business are also actively undergoing pilot trials.

Due to the vast market in my country's financial services field, the sound basic management level and flexible operating style of foreign-funded banks themselves, especially the good operating environment created by our government for foreign-funded banks, Foreign banks are in a very favorable competitive position in China. A specific analysis of the impact of my country's "differentiation between domestic and foreign" policy on the development of foreign-funded banks is as follows:

(1) Taxation and policy preferences provide fertile land for the development of foreign-funded banks. (1) Tax incentives. The income tax rate for general enterprises in mainland my country is 33%, which is consistent with international standards. The income tax rate of my country's national specialized banks is 55%, and that of other commercial banks is 33%. Foreign banks located in special economic zones and coastal areas enjoy preferential tax rates of 15% to 30%. At the same time, most business taxes are exempted, and the tax rate is significantly lower. in Chinese banks. Different tax rates put local financial institutions at a very disadvantageous position in expanding their business scale, leading to inequality in competition between Chinese and foreign banks. (2) Business discounts. Although foreign-funded banks are currently unable to operate certain businesses, at the same time, foreign-funded banks can legally operate other businesses that domestic banks cannot operate. For example, domestic financial institutions are not allowed to engage in investment business within the country, while foreign-funded banks are allowed to engage in foreign currency investment business. (3) The difference in policy burden cannot be ignored. Our banks, especially the four major state-owned commercial banks, still have to bear a considerable part of the so-called "social responsibilities" beyond the business content stipulated in the "Commercial Bank Law". Some policy banks that have been established have not removed commercial banks from society. Completely free from obligations. The obligations of foreign banks to national policies are far weaker than those of local banks, and local governments rarely make policy loan requests to foreign banks, while local banks are often under tremendous pressure for this. In addition, foreign banks are less subject to national macroeconomic control policies.

(2) Financial supervision is relatively weak, allowing foreign banks to violate regulations. Due to the imperfection of my country's financial regulatory system, various regions have relaxed financial regulations in order to attract foreign investment and actively support foreign banks. This has led to problems of insufficient supervision of foreign banks and unequal competition. There are many irregularities in the business activities of foreign-funded banks. The more common ones are: (1) The phenomenon of profit conversion is serious. Some foreign-funded banks often borrow from their head offices at high interest rates, and at the same time remit deposits received in China at low interest rates to their head offices, thereby transferring profits abroad, causing my country's tax revenue to suffer heavy losses. (2) Attracting deposits in excess of proportion. The "Shanghai Management Measures for Foreign-funded Financial Institutions and Sino-foreign Joint Venture Financial Institutions" stipulates: "The deposits received by foreign-funded financial institutions and Sino-foreign joint venture financial institutions from China shall not exceed 40% of the bank's total assets in China." However, the current phenomenon of excessive deposit-taking by foreign-funded banks is quite serious. (3) Working capital is not in place. A small number of foreign-funded banks store working capital abroad or transfer it multiple times, making the working capital untrue. There are also some foreign banks whose liquid assets fail to reach the required ratio. According to regulations, the ratio of liquid assets to deposits of foreign-funded financial institutions cannot be less than 25%. In fact, some even reach less than 10%. (4) The withdrawal of bad debt reserves is unreasonable. It is unreasonable for many foreign-funded banks to set aside bad debt reserves. Some do not mention them at all. Some withdrawal standards are not in accordance with Chinese regulations but in accordance with the regulations of their head offices. Some only withdraw bad debts when bad debts occur or are likely to occur. The amount of bad debts will be withdrawn in equal or approximately equal amounts. If no bad debts occur, no withdrawal will be made. (5) Illegal operations in settlement business. Many foreign banks use unreasonable competition methods in settlement business, such as privately lowering fee standards and inviting customers to go abroad. Lack of necessary documents when handling remittance business, and even accepting false vouchers. (6) Underpayment or omission of deposit reserves. According to my country's current regulations on foreign-funded financial service institutions, foreign-funded banks should pay deposit reserves to the Bank of China in accordance with certain standards. However, some foreign-funded banks have tried their best to pay less or omit deposit reserves.

The formation of the above-mentioned current situation is mainly due to my country's long-term insistence on the basic policy of "combining preferential policies with strict entry and restriction of business scope" for foreign banks. Specifically, it is to attract foreign banks by providing preferential policies and protect the underdeveloped domestic financial industry by strictly restricting business scope. Implemented in practice, the shortcomings of this policy have on the one hand intensified the inequality of competition, "self" strengthened the threat to domestic banks, and brought a strong impact and impact on the business operations and development of Chinese banks, making Chinese banks are at a very disadvantageous position in competition; on the other hand, excessive business restrictions on foreign banks have been accused by the other side of being a discriminatory policy, which has seriously affected our country's image in the international community. This policy can no longer adapt to the principles and requirements of my country's accession to the WTO. Therefore, changing the original approach of "preferential policies plus business restrictions" and adopting a combination of relaxing business scope and strict supervision, using business to attract foreign investment, using strict supervision to restrict the adverse effects of foreign banks, and supporting the domestic banking industry is the fundamental way out .

2. Foreign banks are strategic guides for entering my country’s financial market

In order to weaken the impact of "joining the WTO" on the banking industry, at this stage we should make full use of the relevant principles and provisions of the WTO and follow A strategy that combines relaxed business scope with strict supervision, and implements appropriate protection policies for the domestic banking industry.

(1) Flexible application of relevant WTO principles and provisions

1. Accurate grasp of the principle of national treatment. In the General Agreement on Tariffs and Trade, the principle of national treatment is stipulated as a basic principle, while in the General Agreement on Trade in Services (GATS), national treatment is stipulated as a specific commitment. According to the WTO’s negotiation rules on trade in services, each member can selectively and orderly open certain service sectors or branches based on its own actual situation. In other words, as an obligation, the relevant member only provides national treatment to the services and service providers of other members in the service sectors that have promised to open and grant national treatment; in those areas that have only promised to open but not provide national treatment, the relevant member can only Open relevant markets to other members' services and service providers based on the principle of most-favored-nation treatment without providing national treatment; in sectors not included in the commitment list, members are even less obliged to provide national treatment.

2. Specific application of the asymmetry principle. The principle of asymmetry is one of the basic principles of the General Agreement on Trade in Services. Its content is mainly reflected in two aspects: one is "more participation in the five" by developing countries, and the other is "gradual liberalization". The so-called "increased participation" is mainly found in Article 4, which requires developed countries to provide assistance to developing countries through consultation, enhance the capabilities of their domestic service industries, and improve their efficiency and competitiveness, so that developing countries can more to participate in world trade in services, and special consideration should be given to assisting the least developed countries. The so-called "gradual liberalization" is mainly found in Article 19. It means that each developing country member should provide appropriate measures based on their development situation in terms of opening up some sectors, relaxing fewer types of transactions and gradually expanding market access. flexibility. Accordingly, the further opening up of my country's financial market can be carried out gradually based on my country's policy objectives, the development level of banking service business, and regional distribution, through selective introduction and optimized layout, so as to appropriately extend the buffer time for Chinese banks.

3. Flexible use of most-favored-nation treatment clauses. Unconditional most-favored-nation treatment is the core provision of the General Agreement on Tariffs and Trade. Although the General Agreement on Trade in Services still maintains this principle, many contracting parties insist on conditional most-favored-nation treatment, arguing that the most-favored-nation treatment should be based on the competitiveness of each country's service industry. to determine, or the treatment given to each beneficiary country will be different based on the different development levels. For developed countries, they are also required to bear more responsibilities in the transmission of financial information, the sale of financial services technology and the import of labor-intensive services in accordance with the provisions of the General Agreement on Tariffs and Trade regarding differential treatment and the status of special developing countries. preferential obligations. Accordingly, on the one hand, my country can invoke the principle of unconditional most-favored-nation treatment to obtain reciprocal treatment in the transnational economy; on the other hand, China should actively use the special circumstances of developing countries to request more preferential treatment from the other party. In specific practice, when my country opens its financial market, it is entirely possible to impose necessary restrictions on market access and national treatment through negotiation, and effectively use restrictive measures to appropriately control the distribution, total number and number of branches of foreign-funded banks in the country of origin, and control proportions. etc., to prevent foreign banks from monopolizing or controlling the domestic financial market and ensure the share and status of state-owned commercial banks in our country’s banking system.

4. Reasonable use of guarantee clauses and exception clauses. The safeguard clause in Article 10 of GATS stipulates that due to unforeseen changes after reaching specific commitments, the import scale of a certain service has increased significantly, causing serious damage to the same domestic service and its suppliers, or threatening to do so. , the host country may suspend the agreed commitments in whole or in part. Article 12 stipulates that restrictions, including restrictions on transaction payments and currency transfers, can be re-imposed when the host country has a serious imbalance in its balance of payments or serious difficulties occur in the external financial field. Article 14 stipulates that the host country may take appropriate measures when necessary to maintain public order and public morality, protect the life and health of residents, animals and plants, prevent fraud, protect personal privacy and account secrets, and ensure national defense security. restrictive measures.

Finally, Appendix (4) stipulates that the host country may take necessary restrictive measures out of prudent reasons, in order to ensure the integrity and stability of the financial system, and to protect the interests of investors, depositors, and policyholders. These provisions provide our country with opportunities and conditions to reasonably protect the domestic banking industry. We should carefully study and differentiate between situations and implement effective protection for the domestic financial industry.

(2) Legal adjustments to implement relaxed business and strict regulatory strategies

In terms of the relationship between domestic laws and regulations and international norms, many of the laws and regulations that our country has promulgated and implemented are in line with Internationally recognized norms and norms are inconsistent. For example, relevant foreign-funded institutions operating in RMB in my country must abide by domestic reserves, deposit and loan interest rates, and fund lending regulations, which are all formulated based on my country's current economic and financial conditions and are far from common international practices. In order to adapt to the needs of "joining the WTO" and truly implement the strategy of relaxing business and strict supervision on foreign-funded banks, the financial field must speed up the integration of domestic legislation with the trend of international legislation.

1. In terms of the legislative model for market access, a single-track legislative model of “internal and external integration” should be adopted. Driven by world economic integration, the economic legislation of developing countries (including China) has transformed from the original dual-track legislative model of "separation of internal and external" to the current single-track legislative model of "integration of internal and external", that is, the implementation of The integration of foreign-related economic legislation and domestic economic legislation. Our country's foreign-related financial legislation can also refer to this approach, for example, adding a chapter of "Foreign-funded Banking Institutions" to the "Commercial Bank Law" to adjust the relationship between domestic financial legislation and foreign-related financial legislation. Judging from the current legislative practice, the minimum registered capital requirements for the establishment of commercial banks stipulated in the "Commercial Bank Law" are obviously inconsistent with the minimum registered capital requirements for foreign-funded banks and joint venture banks in the "Management Conditions for Foreign Financial Institutions". The single-track legislative model of "integration of internal and external" can eliminate this dissonance and unify the two by raising the minimum registered capital of the latter.

2. In terms of entry control for foreign banks, strict entry standards and approval conditions must be established to control it. In terms of the organizational form of introducing foreign-funded financial institutions, my country currently introduces three types of bank-type foreign-funded financial institutions, namely, foreign bank branches, foreign-funded (wholly-owned) banks, Sino-foreign joint venture banks, and a representative office that cannot provide actual operating services. . From the perspective of financial management authorities, the safest form of foreign capital participation is a representative office, and the most dangerous form is a branch. The reason is that branches can operate various banks including deposits, lending businesses, and trust businesses permitted by the host country. Business, and the branch is a foreign legal person, its business is listed on the balance sheet of its head office, and is subject to minimal supervision by the host country's financial management agency and cannot be controlled. my country's "Administrative Conditions for Foreign-Invested Financial Institutions" not only do not strictly distinguish between the establishment conditions of branches and other forms of financial institutions, but in practice it also focuses on branches. To correct this tendency and make the introduction of foreign banks most conducive to the development of my country's banking industry, we must differentiate the approval conditions and procedures for different business forms. For example, the approval of foreign representatives should be simplified as much as possible; the establishment of joint venture banks with foreign banks as shareholders is allowed, but the maximum limit of foreign equity participation must be stipulated in law; high standards must be adhered to for the conditions for foreign banks to establish branches in my country, and their requirements The examination and approval of foreign-funded financial institutions should be stricter than that of other forms of foreign-funded financial institutions; a separate examination and approval system for foreign-funded banks shall be implemented, and the licenses shall be uniformly issued by the People's Bank of China.

3. In terms of business management, when it comes to opening up foreign banks to operate RMB business, appropriately relaxing business controls should be a gradual and selective process. First of all, it is required that foreign-funded banks that open RMB business must have outstanding performance, good reputation, and have been operating in my country for a certain period of time and have a certain scale; secondly, foreign-funded banks in some special economic zones can be selected to open up RMB business.