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In November 2011, the Chinese Insurance Regulatory Commission
(CIRC) published a short note on its website with respect to the
implications of China's recent opening-up of its insurance
industry. According to the note, fifty-five companies supported by
foreign investment (with around 1,300 branches) have now been
established in China. Foreign investment backed insurance companies
are concentrated in the large cities of Shanghai, Beijing, Shenzhen
and Guangzhou, with respective market share estimated at between 6
to 11 per cent.
In addition to introducing foreign investment into the Chinese
insurance market, the CIRC has gradually applied its "going
global" strategy for Chinese insurers wishing to enter the
international insurance market. As at the end of November 2011,
eight Chinese insurers had established legal entities overseas for
the purpose of engaging in international business, with another six
Chinese insurers setting up their overseas representative offices
for the purpose of exploring offshore markets.
In 2000 the CIRC joined the International Association of
Insurance Supervisors (IAIS) and later became a member of the
executive committee in 2008, followed by the audit committee in
2010. These appointments greatly improved the CIRC's
international influence in the global insurance market. In addition
to its greater role in international supervision, the CIRC has
signed up to a number of bilateral cooperation agreements with
insurance regulators in a number of jurisdictions, including the
United States of America, the United Kingdom, Hong Kong, and Japan.
The CIRC has also established an insurance dialogue mechanism with
insurance regulators in the US and the UK, with a particular focus
on sharing supervisory information and developing the commercial
pension insurance market. As a representative of a developing
country, the CIRC has actively participated in drafting the
Supervisory Framework for International Insurance Groups. This
active involvement of the CIRC has largely mitigated the impact of
the overhaul of the international supervisory rules upon
China's insurance industry.
According to the note, the CIRC will continue its policy of
opening up the Chinese insurance industry, focusing on attracting
further foreign investment in the health and pension sectors as
well as increasing the establishment of branches in the Mid-West of
mainland China. However, given the existing international financial
environment, the CIRC requires that all insurance companies
regularly assess the risks resulting from the internationalisation
of the insurance industry, particularly taking care to avoid
unnecessary transfer of risk from foreign owners to their Chinese
subsidiaries.
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Direct trading of the Australian Dollar and the Chinese Yuan Renminbi commenced on 10 April 2013, pursuant to an agreement between the Australian Government and the People's Bank of China.
