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China frustrates with lagging WTO preparations

A day after China joined the World Trade Organisation, officials are still rewriting hundreds of old laws on Wednesday to meet WTO pledges, frustrating a wave of foreign companies rushing into the market.

In many cases, China has not finished drafting the laws or educated officials about the new rules of the game, state media, officials and business executives said on Wednesday.

"We must implement a one-time, thorough clean up of laws, rules, regulations and policies for trade," cabinet member Wu Yi said, in the first reported remarks by a top leader after China formally became a WTO member following a 15-year quest.

"Adapting to the new situation after entry to the WTO is an important task," she was quoted by the Communist Party mouthpiece People's Daily as telling legislative officials.

Just how unprepared China might be is anyone's guess.

To its credit, the cabinet has already announced new tariffs for next year and rules on anti-dumping and anti-subsidies.

The powerful State Development Planning Commission has scrapped 124 regulations incompatible with WTO membership. Super-ministry, the State Economic and Trade Commission, has abolished 13 rules. The central bank has thrown out six.

But the State Council, or cabinet, had yet to finish drafting or revising a group of 40 laws and regulations, the China Daily said. Cabinet departments must still scrap or revise 1,000 administrative codes, it said.

China must still revise or eliminate more than 90 major laws and 1,000 rules, the newspaper said.

That hasn't stopped foreign firms from jumping to take advantage of market opening under WTO although many are tempering optimism about how quickly the business environment will improve.

FIRMS RUSH IN

At least four foreign insurers have announced they had received approval to enter the market or expand operations.

China gave the green light to New York Life Insurance and MetLife of the United States, as well as Japan's Nippon Life Insurance Co, to sell policies.

Canada's Manulife also said its joint venture would set up an additional branch in the southern city of Guangzhou.

Foreign banking giants like Citibank have moved to take advantage of market opening which allows them to provide foreign exchange services to domestic clients.

The stock market regulator said on Wednesday that foreign securities firms could apply to trade hard currency B shares directly without having to go through a Chinese intermediary.

Some foreign firms, however, are still stranded.

In one case, foreign financial institutions are waiting for a law on joint venture fund management companies, even though China started allowing minority foreign-owned ventures for fund management immediately on entry.

"There's no law out there. How do you structure it? What's the capital?" asked a frustrated executive of a US insurance firm.

Even if rules exist, millions of local officials remain unaware of them, or resistant.

"There are coordination problems between the central government and regional and local governments. That's where we will get some slippage," said Michael Spencer, chief Asia economist for Deutsche Bank in Hong Kong.

The Foreign Trade Ministry has yet to publish a Chinese version of the WTO agreement, although it released the English text on its website (www.moftec.gov.cn).

"We have to check the Chinese version against the original many times before we finally release it. We will release the Chinese version very soon after approval," a ministry spokesman said.

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