GoJIL Vol. 1, No. 3 (2009)
Market Access or Market Restrictions – Analysis on the Regulations of PRC on Administration of Foreign-funded Banks
In order to honor the commitments made on its accession into the World Trade Organization, China has opened its banking sector to foreign investment since December 11, 2006. Meanwhile, the State Council of China has promulgated the newly revised Regulations of the People's Republic of China on Administration of Foreign-funded Banks and China Banking Regulatory Commission has published the corresponding Rules for Implementing the Regulations of the People's Republic of China on Administration of Foreign-funded Banks. Although the new Regulations and Rules have ensured that the juridical-person banks with foreign fund can receive the national treatment as that of their Chinese counterparts, they still contain some restrictions on the business of foreign bank branches. These restrictions, when examined prima facie, appear to be in conformity with the exception rule of prudential supervision under GATS. However, if we examine the specific commitments of China and other relevant rules, we may find that these restrictions are not so justified for prudential reasons. In other words, "prudential supervision" is not a persuasive excuse if China is challenged for these restrictive measures in the WTO dispute settlement proceedings. We suggest that China should reassess the new Regulations and Rules.
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