Institute Comments on Proposal to Allow U.S., Chinese Joint VenturesWashington, DC, January 11, 2002 - The China Securities Regulatory Commission (CSRC) has proposed rules that would permit foreign institutions, including U.S. firms, to enter into joint ventures with Chinese companies to provide asset management services in China. In response, the Institute provided comments to the U.S. Department of Treasury and Chinese authorities before the comment period ended on December 31, 2001. In the comment letter submitted directly to the CSRC, the Institute requested that: - the criteria that will be used by the CSRC to approve a foreign firm for a joint venture be clearly set forth in the regulations;
- the capital requirements be clarified and be set at a less excessive level;
- the CSRC take into consideration the different legal systems around the world in requiring a certification from the home-country regulator;
- the CSRC not use fund performance as a criteria for approving a foreign institution for a joint venture;
- participation in the B share market not be a basis for disqualifying a foreign institution from participating in a joint venture; and
- application materials submitted to the CSRC be provided confidential treatment if such treatment is requested by the applicant.
Under the World Trade Organization (WTO) accession agreement, foreign firms will be able to own up to 33 percent of a Chinese asset management firm upon China's accession into the WTO and up to 49 percent of an asset manager within three years thereafter. China acceded to the WTO on December 11, 2001.
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