Coalition Urges Further Progress on Financial Services

WASHINGTON, DC - Engage China, a coalition of ten financial services trade associations united in support of the goals of the U.S.-China Strategic Economic Dialogue (SED), today released the following statement on the U.S.-China SED, which will hold its fourth meeting in Annapolis, MD, June 17th and 18th:

“The Engage China coalition supports the goals of the U.S.-China Strategic Economic Dialogue (SED) and believes continued engagement with China is the best way to remove the barriers that global securities firms, banks, insurance companies and brokers and asset managers face in China. The SED provides a vital forum for leaders to address our economic relationship and the mutual benefits achieved through the greater opening of China's financial markets to global financial institutions.

“The economic relationship between the U.S. and China is more important than ever. As our fastest growing export market, China is helping to strengthen America’s economy. U.S. exports to China are growing at six times the rate of our exports to the rest of the world and China last year surpassed Japan to become America’s third largest customer. As the U.S. economy slows, growing exports to countries like China are helping to offset the housing downturn. China’s growing market offers tremendous opportunities for American businesses and workers. We urge policymakers to focus on the opportunities the Chinese market offers for America’s businesses and workers.

“The U.S.-China Strategic Economic Dialogue has helped to enhance the vital economic relationship between the U.S. and China. Throughout this process, China has made incremental progress in opening its financial sector to foreign participation, but much more progress is still needed.

“Expanded access to the Chinese market for U.S. financial services firms will yield great benefits for the U.S. economy and the Chinese economy as well. The world-class expertise that U.S. financial services institutions bring will help to expand the availability of capital and provide Chinese consumers greater access to a range of financial-services products not currently available.

“China’s underdeveloped financial sector is a major obstacle to China’s achievement of its own economic goals of diversifying its economy to include a robust services sector and a more active consumer. Financial products and services – such as mortgages, credit cards, personal loans, insurance, pensions and investment products – that would help China’s businesses and consumers save and invest, prepare for unforeseen events, finance large purchases such as a house or automobile, and prepare for retirement are not readily available. The lack of such products and services leads to excessive levels of savings that limit the ability of China’s people to fully benefit from China's economic growth, and to consume U.S. exports at a higher rate. In this regard, the Coalition takes note of the WTO's Trade Policy Review of China, which observes, ‘another way of reducing China's high propensity to save would be by channelling savings into the most profitable investments, thus improving the productivity of capital in the economy as a whole; this requires ongoing reform of the capital market to render it more efficient (and improve the transmission, and thus operation, of monetary policy).’

“Expanded access to financial services products can also help improve the quality of life of ordinary Chinese citizens. For example, retirement savings products can bring peace of mind by helping people to prepare for financial needs later in life; and risk management services can provide citizens and businesses with a greater awareness of risk and how to reduce it. Taken together, progress in these and other areas will greatly enhance China's effort to build and improve its social safety net and bolster the health and stability of its financial services sector and provide a range of benefits throughout China.

“The Engage China coalition looks forward to further progress on issues such as:

• The clear benefits to China of increased market access for foreign financial services firms – such as the introduction of world-class expertise, technology, products and services, and best practices – and the importance of removing remaining obstacles to greater foreign participation;
• Non-discriminatory national treatment with regard to licensing, processing of applications, corporate form, and permitted products and services;
• Non-discriminatory national treatment with regard to supervision and regulation; and,
• Regulatory and procedural transparency.

“We recognize the complexity of this process, but remain hopeful that meaningful progress will be made in the area of financial services. Indeed, for the SED to continue its already important role in deepening political and economic mutual understanding between the U.S. and China, we believe continued and tangible progress is critical. We commend Secretary Paulson and Vice Premier Wang Qishan for their support of the SED and believe engagement is key to achieving the economic goals of both the U.S. and China.”

The Engage China coalition is made up of the American Bankers Association, the American Council of Life Insurers, the American Insurance Association, the Council of Insurance Agents & Brokers, the Bankers' Association for Finance & Trade, the Financial Services Forum, the Financial Services Roundtable, the Futures Industry Association, the Investment Company Institute, and the Securities Industry and Financial Markets Association.

Find out more at www.EngageChina.com

Fact Sheet — China and the U.S. Economy