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.”