The Practice And Development Of Chinese Insurance Industry Utilizing Foreign Capital

On Dec11, 2001, China's successful entry into the World Trade Organization (WTO), indicated that Chinese insurance industry had been roundly opened to the world, and it began to utilize foreign capital on a large scale. Up to now, China has been the member of WTO for 5 years, Chinese insurance industry utilizing foreign capital has some new characteristics, such as channels being diversified, difference of forms, amount and scale increasing rapidly etc. Now, the main channel of Chinese insurance industry utilizing foreign capital is still foreign direct investment (FDI). Along with the further open of China market, foreign insurance companies make an enormous achievement. At the same time, the work of Chinese insurance industry utilizing foreign capital get plentiful and substantial fruits.Practice is the only standard to check the truth. That foreign insurance companies come into our domestic market, makes a great contribution on economic development and social progress. However, the significance of utilizing foreign capital in insurance is more than above. It gives Chinese insurance industry important impact on industry organization. This paper will pay attention to the impact through Chinese insurance's market structure, market conduct and market performance. Everything has two sides. On one hand, utilizing foreign capital gives Chinese economy, society and insurance industry much contribution; on the other hand, it confronts Chinese insurance industry with many potential risks, e.g. partial monopolization, unnoticed being controlled, market share descending gradually, transnational profit movement, illegal operation and so on.Consequently, the related government departments should continuously formulate policies to utilize foreign capital reasonably, improve the standard of management, control risks effectively, do the governor's best to develop what is the useful and avoid what is not.Under the terms of WTO, looking forward to the future of utilizing foreign capital, reviewing the deficiency of the currentpolicies, and advising the proposals on further optimization of utilizing foreign capital, are just the emphasis and the significance of this paper.Regarding above all, the paper brings forward a series of measures, e.g. the idea of developing by competition, opening the market and permitting foreign capital to engage the life insurance all by itself, adjusting the structure of utilizing foreign capital reasonably, regulating the insurance to develop fairly by taxation, and searching after the new models of utilizing foreign capital etc. Through this paper, the writer hopes to optimize the policy systems of Chinese insurance industry utilizing foreign capital.