Opening Up Financial Services and Trade, Mainland’s Bold Move for Compelled Reforms

  Opening Up Financial Services and Trade, Mainland’s Bold Move for Compelled Reforms

China Times Editorial (Taipei, Taiwan, ROC)

May 20, 2017

 Translation of an Except

China and the United States reached a new trade agreement. The Mainland has made a bold move in opening up the financial services sector, agreeing to proceed to deepen cooperation and open up in five facets, i.e., credit rating, cross-border payment settlement, electronic payment, banking services, and bond settlement. The Mainland will allow foreign-capital, mainly US, financial services corporations to provide local enterprises with credit rating services, allow VISA, MasterCard and other US electronic payment service providers to apply for licenses in China, opening up US qualified financial institutions to handle bond market underwriting and settlement services, usually reserved for Mainland banks; the two sides will cooperate in overseeing cross-border liquidation institutions and in information exchange.

In as far as access and opening up of the financial services market are concerned, it looks like China got the short end of the deal in the Sino-American trade agreement this time; China will open three categories and the United States is only committed to one. However, from the perspective of long-term national strategic development, it is in fact, an indispensable measure for the internationalization of China’s financial services market, and it is also Beijing’s prescribed direction for pushing for financial services reform; looming behind is an ever intense sense of getting the upper hand. US Commerce Secretary Ross has indicated that in the future, China and the United States will sign more trade agreements, perhaps 500, or even possibly over 500. If this statement is true, the future multiplying effect will not only fall on the financial services sector, it will encompass the entire services industry.

In 2001, Zhu Rongji pushed for China to accede to the WTO, realizing its dreams. China was compelled to deepen systemic reforms and open up markets; it however ushered in more than a decade of good times for the China’s manufacturing industry. This time if China can initiate the first step in opening up the financial services market through the Sino-American trade agreement, stimulating the economy and accelerating the transformation of industrial structure, why couldn’t it duplicate the experience of China's accession to the WTO, creating a golden age for the development of China's services industry?

Facing the possibly enormous market business opportunities, and viewed from the current cross-Strait relations of interaction, Taiwan is predestined to sit on the sidelines. Needless to say, when the Mainland succeeds in transformation, it will bring forth a magnet effect which will further impact Taiwan's economy and industrial development. When that time arrives, will we really have the capital to cope with the impact? Or will it be another situation where industries will be left to their own devices? This merits profound pondering of the leadership.

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