An array of policies and rules including QDII will have the following 5 highlights encouraging business expansion of foreign banks in China, according to China Banking Regulatory Commission.

Firstly, rules on QDII (qualified domestic investment institutions) will be issued. Experienced banks will act as agencies.

Secondly, the access of fund management companies set by Chinese commercial banks is under study. Experienced foreign banks or foreign fund management companies are welcome as strategic investors.

Thirdly, the possibility of setting up foreign funded financial firms is under consideration. Given the fact that concentrated financial management is necessary for both foreign and Chinese corporations, domestic financial firms are encouraged to attract overseas strategic investors. A single institution can hold as much as 20 percent stakes while the ratio will be higher if there are several.

Fourthly, experienced strategic investors can contribute to the reform of small and medium Chinese banks. This will facilitate foreign banks to expand their business and products via networks built by their domestic partners.

Fifthly, auto financing firms will grow up. GM, Toyota and Volkswagen have already got approval to launch auto financing service. If the founder is a Chinese auto producer, then CBRC will get it motivated to achieve efficient risk management by introducing overseas strategic investors which are very familiar with auto financing or retailing.

(People's Daily June 7, 2004)