VZCZCXRO6694
PP RUEHCN RUEHGH RUEHVC
DE RUEHBJ #2791 2720842
ZNR UUUUU ZZH
P 290842Z SEP 09
FM AMEMBASSY BEIJING
TO RUEHOO/CHINA POSTS COLLECTIVE PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 6274
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

UNCLAS BEIJING 002791 
 
SIPDIS 
 
STATE PLEASE PASS USTR FOR STRATFORD, MAIN 
 
E.O. 12958: N/A 
TAGS: ECON CH
SUBJECT: PROGRESS IN THE JCCT INSURANCE DIALOGUE 
 
¶1. (U) Summary. China will act on a USG request to amend its 
administrative regulations of the insurance industry to 
distinguish between serious and minor violations to avoid 
overly-penalizing minor transgressions, a senior China 
Insurance Regulatory Commission (CIRC) official told visiting 
Assistant USTR.  The Ministry will not, however, agree to two 
other long-standing US "asks" to lift restrictions on third 
party auto liability insurance and on asset management at 
this time, he said.  CIRC is interested in convening a 
meeting between US and Chinese experts to discuss financial 
market regulation and other topics relevant to the insurance 
industry.  End Summary. 
 
¶2. (U) China will amend its administrative regulations of the 
insurance industry to differentiate between serious and minor 
violations such that minor violations will not be subject to 
the two year ban on opening new branch offices China 
Insurance Regulatory Commission (CIRC) Vice Chairman Li Kemu 
told Assistant US Trade Representative Tim Stratford 
September 24. Li noted this issue had been raised by the US 
during the Joint Commission on Commerce and Trade (JCCT) 
Insurance Dialogue in September in Dalian.  He said China 
hopes to publish the revision to the law before the October 
28 JCCT summit in Hangzhou and that the change could be 
highlighted as a positive outcome of the talks. 
 
"No" to Third Party Insurance Participation 
------------------------------------------- 
 
¶3. (U) Asked again about the possibility of opening up its 
third party auto liability insurance market to foreign 
company participation, Li stated CIRC is "actively studying" 
the issue. (Note: This has been a long-standing US "ask." End 
Note).  AUSTR Stratford suggested CIRC could launch a pilot 
project to test the proposition before opening the entire 
market to foreign participation.  Li agreed, saying that when 
CIRC decides to move forward on this issue, the Ministry 
would consider establishing a pilot zone. 
 
¶4. (U) Li said the CIRC will not agree to lift insurance 
companies' 30 percent cap on investment in corporate bonds. 
He admitted both Chinese and American insurance companies 
would like to have the cap lifted, but, given the relatively 
immature state of the industry in China and the global 
financial crisis, the Ministry believes the limits are 
necessary.  Li suggested, in the future, the CIRC might make 
a distinction between "capable" and "incapable" companies, 
allowing the former more discretion in asset management 
decisions. 
 
"Yes" to Exchanging Information 
------------------------------- 
 
¶5. (U) The CIRC's international department has formed a study 
group to analyze international practices in financial market 
regulation, Li explained.  The group is particularly 
interested in how these practices are evolving given the 
financial crisis and has three focus areas for the study - 
macro-prudential supervision, regulating financial innovation 
and countercyclical financial measures.  Li said this group 
could meet with US experts to discuss asset management 
regulations and other topics of mutual interest. 
 
¶6. (U) AUSTR Stratford asked about the status of Liberty 
Mutual's "preparation of branch" application. (Note: To allow 
the company to open an additional branch.  End Note).  Li 
replied CIRC is reviewing the application and that a 
"positive answer" would be forthcoming. 
HUNTSMAN