On Tuesday night President Clinton signed into law the bill granting China Permanent Normal Trading Relations (PNTR), opening a new era between the U.S. and the People’s Republic, and furthering China’s bid to join the World Trade Organization, perhaps before the end of the year.
The insurance industry stands to benefit from the accord, along with the telecommunications, financial and agricultural sectors, as it provides for the gradual dismantling of China’s geographic and legal restraints on insurance activities.
Industry leaders, including Maurice Greenberg of ÌìÃÀÍøÕ¾´«Ã½´«Ã½ and H. Edward Hanway of CIGNA, have strongly supported the bill, and, at least on paper, it provides increased opportunities in the Chinese market for U.S. insurers. While some companies have received licenses to operate – ÌìÃÀÍøÕ¾´«Ã½´«Ã½,Chubb, John Hancock – their activities have been limited to Shanghai and Guangzhou, and China’s insurance market for both domestic and foreign clients is dominated by local companies.
Nevertheless there is considerable anxiety on both sides of the Pacific. Chinese leaders fear that the introduction of foreign competition could cause massive job losses as China’s inefficient state-run factories are forced to close, and in the U.S. labor union leaders foresee the increase of cheap imports from China as a threat to American workers.
Meanwhile, negotiations in Geneva between Chinese representatives and the WTO are moving very slowly, if at all, and the terms under which China will join the organization have yet to be determined.
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