President Donald Trump and Chinese Vice Premier Liu He signed an economic and trade agreement that promises to increase the agricultural and other goods and services China will buy from the U.S. by $200 billion. For its part, the U.S. has agreed to slash tariffs on $120 billion in Chinese goods by half to 7.5 percent and to hold off on imposing any new tariffs.
The pact also promises added protections for the intellectual property of U.S. businesses in China and lessens the pressure for U.S. firms to share their technologies with Chinese firms as a condition of doing business in China.
On insurance, China has vowed to remove various barriers to entry by U.S. carriers and intermediaries and speed up licensing. The U.S. said it will move more quickly on requests by Chinese (re)insurers to operate in the U.S.
Trump called the deal “momentous” and said he would schedule a visit to China now that this first phase of a two-part trade deal has been accomplished.
“This is a very important and remarkable occasion,” Trump said.
The second agreement is expected to address some difficult issues not addressed in this initial pact. This first phase does not require China to make any legal reforms or reduce subsidies the government gives to Chinese firms.
“As soon as this kicks in, we’re starting phase two,” Trump said.
[In his remarks, Trump thanked various business leaders including Starr Insurance Co. Chairman Maurice “Hank” Greenberg, the former chairman of American International Group and a pioneer in opening China and other foreign markets to U.S. insurers. Greenberg headed AIG for nearly four decades before being ousted in March 2005. “If they had taken care of Hank, they wouldn’t have had the problems that they had,” Trump said.]
Chapter 4 of the just-signed trade agreement covers financial services including banking, credit rating services, electronic payment services, insurance and securities and fund management. The following excerpts are from the section on insurance in which China promises to open up its markets to U.S. insurers:
- No later than April 1, 2020, China shall remove the foreign equity cap in the life, pension, and health insurance sectors and allow wholly U.S.-owned insurance companies to participate in these sectors. China affirms that there are no restrictions on the ability of U.S.-owned insurance companies established in China to wholly own insurance asset management companies in China.
- No later than April 1, 2020, China shall remove any business scope limitations, discriminatory regulatory processes and requirements, and overly burdensome licensing and operating requirements for all insurance sectors (including insurance intermediation), and shall thereafter review and approve expeditiously any application by U.S. financial services suppliers for licenses to supply insurance services. In accordance with this commitment, China affirms that it has eliminated the requirement of thirty-years of insurance business operations for establishment of new foreign insurance companies.
- The United States acknowledges current pending requests by Chinese institutions, including by China Reinsurance Group, and affirms that such requests will be considered expeditiously.
Insurer Chubb, which in November increased its stake in Chinese insurer Huatai Insurance Group and has a partnership with China’s largest property/casualty insurer PICC Property & Casualty Co., welcomed the news and expressed hope for more t come.
“Chubb welcomes and supports the successful completion of the Phase One trade agreement between the United States and China. We congratulate the governments of both nations for achieving this important confidence-building step,” the company’s statement said. “We urge the U.S. and China to expeditiously move to the important Phase Two negotiations, taking into account the interests of both countries while reconciling important differences. At Chubb, we have confidence in the long-term potential of the Chinese insurance market, and this agreement should expand market access for American business in financial services, including insurance.”
*This story ran previously in our sister publication Insurance Journal.