Congress and the Bush administration need to join to hold the Chinese government accountable for living up to its trade commitments, witnesses told the House Financial Services Committee Wednesday.

Lawmakers “can play a tremendously powerful role” in the effort to open China’s financial services markets by supporting the ongoing Strategic Economic Dialogue, a series of summits between U.S. and China officials aimed at resolving trade issues between the 2 countries, said Norman Sorenson, president of Principal International Inc., a unit of Principal Financial Group Inc., Des Moines, Iowa.

Sorenson spoke at the hearing on behalf of the American Council of Life Insurers, Washington, and serves as the chairman of the ACLI’s international committee.

If lawmakers and administration officials team up on this issue, “I think the Chinese will see that we are a united front,” Sorenson said.

Challenges facing U.S. financial services companies in China include limited access to the market, restrictions on U.S. subsidiaries and joint ventures to expand in China, and an opaque regulatory system, witnesses and Financial Services Committee member said.

Chinese officials have progress, Sorenson said.

Sorenson praised Chinese officials for agreeing to streamline their licensing procedures for foreign pension services.

Officials also say will complete a review of applications for branch-to-subsidiary conversion in August, with all future applications for conversion to be completed within 60 days.

But China needs to do more to meet its World Trade Organization commitments regarding insurance issues and the removal of equity limits on foreign ownership of companies.

China also needs to set up a “one stop shop” regulator that can approve licenses for enterprise annuity products and other pension-related products and services, Sorenson said.

Donald Evans, chief executive officer of the Financial Services Forum, Washington, said some see preventing manipulation of the exchange rate for the U.S. and Chinese currencies as a “silver bullet” for resolving any trade problems. He said he believes the focus should be on impressing on the Chinese the message to “open your financial markets.”

But Evans said he was not dismissing the idea of WTO action entirely.

“I think we ought to use the WTO any time we can if it means leveling the plying field,” Evans said.

Committee Chairman Barney Frank, D-Mass., said the term “unlevel playing field” is used far too often during congressional hearings but does seem to apply to the Chinese and U.S. financial services markets.

“The openness of one’s economy to the other is unlevel,” Frank said.

Chinese companies have used easy access to the U.S. market to hurt North Carolina textile and furniture companies badly, but China itself has limited Bank of America Corp., Charlotte, N.C., to buying only a 10% stake in a Chinese bank, according to Rep. Mel Watt, D-N.C.

Sorenson reported that, even though Chinese law limits foreign companies to a 25% stake in Chinese banks and a 50% stake in Chinese insurance companies, Chinese regulators were adamant that an American bank be part of the Bank of America deal, to ensure the resulting joint venture would have the technical expertise to compete.

“The regulators knew that without a foreign partner, providing the technical expertise, that institution would not do as well,” Sorenson said.

Expertise is a concern for the Chinese, agreed Eswar Prasad, a professor at Cornell University and former head of the International Monetary Fund’s China division.

Chinese authorities are concerned about the lack of financial expertise both within their companies and within the government.

Chinese regulators are not sure whether they have the expertise to regulate the foreign companies, Prasad said.