Xiamen's finance sector is well developed, providing a variety of fast and adequate financial services of high quality.

Ten Domestic Commercial Banks:
Industrial and Commercial Bank of China Xiamen Branch, The Agriculture Bank of China Xiamen Branch, Bank of China Xiamen Branch, Construction Bank of China Xiamen Branch, Communication Bank Xiamen Branch, Industrial Bank Xiamen Branch, China Everbright Bank Xiamen Branch, Zhongxin Industrial Bank Xiamen Branch, China Merchants Bank Xiamen Branch, Xiamen City Commercial Bank

13 Foreign-funded commercial banks have set up headquarters, branches or representative offices in Xiamen:
Allied Commercial Bank, Hong Kong Chiyu Banking Co.,Ltd. Xiamen Branch, the Hong Kong & Shanghai Banking Corporation Ltd. Xiamen Branch, United Overseas Bank Ltd.(Singapore) Xiamen Branch, Standard Chartered Bank(U.K.) Xiamen Branch, Bank of the Orient (USA) Xiamen Branch, Overseas-Chinese Banking Corporation Ltd.(Singapore) Xiamen Branch, Credit Lyonnais Bank (France) Xiamen Branch, The Bank of East Asia, Ltd.(Hong Kong) Xiamen Branch, Bangkok Bank (Thailand) Xiamen Branch, Hengsheng Bank (Hong Kong) Xiamen Representative Office, Citibank (USA) Xiamen Representative Office, Mizuho Corporate Bank Ltd. Xiamen Representative Office

Xiamen International Bank, a joint-venture, set up its headquarters in Xiamen

Over 460 financial service offices under the supervision of the People’s Bank of China

12 securities agencies and 23 stock exchange departments

16 public-listed companies

Banking & Insurance

Year 2000

Development in Financial Sector

In year 2000, Xiamen's financial sector maintained a stable growth momentum. With deposits on the rise and the loans granted at the appropriate rate, the structure of deposit and loan was optimized. Xiamen made rapid progress in negotiable instruments and financing. A surplus was registered in terms of foreign exchange income, while the situation of cash income and expenditure remained normal. Direct financing from social circles was expanding.

I. Great changes took place in deposits of RMB which were on the increase.

By the end of Year 2000, there had been a balance of 54.49 billion RMB in deposit, an increase of 4.761 billion RMB over the start of the year and a year-on-year decrease of 173 million RMB. Dropping to the low in March 2000, the deposits then began to increase at a accelerating speed in April as a result of increasing of loans and returning of derivative deposits and sales. In September alone, it registered a monthly increase of 2.276 billion RMB, the largest increase of the first 11 months in that year. Oct. and Nov. saw a drop in deposit. But, the last month had a monthly increase of 2.867 RMB, the largest monthly increase of that year.

In the aspect of deposit structure, deposits from enterprises were still the main factor leading to major changes of the deposit. Except the fact that deposits from enterprises had a seasonal drop in March, it had striking increase in other months. By the end of September, the balance of deposit from enterprises amounted to 25.216 billion, the second highest of the year. A drop was followed. At the end of the year, balance of deposits from various sectors was 27.177 billion RMB, an increase of 4.199 billion RMB over the beginning of the year.

Affected by Macro economy and financial policies including the cut of interest rate, the savings deposit in 2000 went to various markets. By the end of 2000, the savings deposit in Xiamen amounted to 21.846 billion RMB, an increase of 763 million RMB over the beginning of the year and a year-on-year decrease of 528 million RMB. The growth of savings deposit was affected by factors including the stock market, bond market, real estate and foreign exchange savings.

II. Loans granted were increasing at appropriate rate and there was improvement of sectors they went to.

By the end of 2000, all loans in RMB reached 45.284 billion RMB, an actual increase of 165 million RMB over the start of the year, from which loans grated by the sole state-owned commercial banks amounted to 34.981 billion RMB, an actual increase of 4.22 billion RMB.

In view of loan structure, the medium and long-term loans has an actual increase of 389 million RMB over the beginning of the year and a year-on-year increase of 380 million RMB. In particular, the loans for technological renovation had an increase of 165 million RMB and a year-on-year increase of 277 million RMB. Medium and long-term loans for working capital were an actual increase of 659 million RMB and a year-one-year decrease of 100 million RMB. Short-term loans had an increase of 4.186 billion RMB over the start of the year, or 78.63% of the total increasing number for the whole year. Other short-term loans had an increase of 4.389 billion RMB.

In view of sectors loans went to, loans to foreign-funded enterprises had an increase of 241 million RMB over the start of the year and a year-on-year decrease of 841 million RMB. Loans for agricultural use had an increase of 186 million RMB and a year-on-year increase of 180 million RMB. Loans for building industry had a decrease of 319 million RMB and a year-on-year decrease of 100 million RMB. Loans for industrial enterprises were a drop of 9 million RMB, compared with the start of the year, and a year-on-year decrease of 18 million RMB. Loans for commercial and trade companies had an increase of 19 million RMB over the start of the year and a year-on-year decrease of 22 million RMB. Loans to the private sector were a drop of 65 million RMB, compared with the start of the year.

As far as borrowers were concerned, loans to enterprises had an increase of 1.61 billion RMB, lower than these for the individual consumption. In 2000, loans for individual consumption had an increase of 3.714 billion RMB, or 70% of the total loans increased. By the end of the year, consumer loans amounted to 7.2 billion RMB, or 14.75% of the total loans.

Rapid development was made in negotiable instruments and financing business. For the full year, acceptance bills and discounts valued at 4.37 billion RMB and 3.751 billion RMB respectively had been issued, year-on-year increase of 26.85% and 99.84% respectively. At the end of the year, the balances of discount and rediscount were 752 million RMB and 938 million RMB respectively, or increases of 407 million RMB and 619 million RMB respectively over the numbers of the start of the year.

III. The foreign debts continued to drop.

As a result of rise in interest rate of foreign exchange and a weak demand from enterprises, foreign exchange loans amounted to 897 million USD, a drop of 275 million USD over the start of the year. The foreign exchang esavings reached 1.316 billion USD, an increase of 259 million USD over the start of the year.

The individual foreign exchange savings under the current account continued to grow robustly. By the end of December 2000, it amounted to 75 million USD, an increase of 172 million USD over the start of the year.

By the end of December, foreign exchange demand savings of enterprises under current account had reached 151 million USD, a decrease of 27 million USD over the start of the year, while the fixed one under current account was 238 million USD, a decrease of 208 million over the start of the year.

In terms of foreign debts, the amount of foreign debts borrowed and paying back both dropped and the payment was more active than the borrowing. By the end of Dec., direct foreign debts (excluding loans granted by foreign governments and international financial organizations) reached 772 million USD, a decrease of 208 million USD.

IV. Volume of settlement increased by large margin while a surplus was maintained in terms of trade.

The settlement of exchange remained a sound surplus and the volume continued to grow. The settlement for the whole year amounted to 3.669 million USD, a year-on-year increase of 32.1%. The selling deals amounted to 2.202 billion USD, up 3.87 % of 1999. The surplus was 1.476 billion USD, an increase of 123%. The settlement of exchange in terms of trade reached 1.649 billion USD, an increase of 92%. Non-trade settlement of exchange had an accumulated deficit of 61 million USD, up 177%. Settlement of exchange under the capital item had a total deficit of 120 million USD, a drop of 32%. And there was an improvement in this sector.

V. Cash issued on the decrease.

For the whole year, the total cash receipts amounted to 115.8 billion RMB, up 4.4% over that of 1999; while the disbursements reached 117.2 billion RMB, up 3%. The net cash put into the market reached 1.356 billion RMB, a decrease of 1.397 billion RMB or 50.7%. The payroll management system for enterprises and the popularity of "Golden Card Project" had resulted in the decrease in withdrawal of cash.

In 1999, the financial departments continued to implement the stable monetary policies, strengthen the financial supervision, improve service, speed up the reform and opening up in this sector, explore new business and create a sound financial environment here. All these had played an important role in boosting the local economy and optimizing structure.

I. With the stable operation, the financial industry made further progress.

By the end of 1999, financial organizations in Xiamen had a deposit totaling 49.744 billion RMB, up 4.934 billion RMB over the start of the year. The foreign exchange savings amounted to 1.061 billion USD, up 231 million USD over the start of the year. The loans in RMB reached 43.53 billion RMB, an increase of 4.741 billion RMB over the start of the year and 300 million RMB more than that of 1998. Loans in foreign exchange reached 1.157 billion USD, a drop of 310 million USD over the start of the year. The cash receipts and disbursements statement showed that there was a net input of 2.753 billion RMB, a record high. The surplus of exchange settlement expanded to reach 658 million USD. With stable operation, the financial industry had made further progress to meet the demand of stable growth of national economy.

Deposits by enterprises increased gradually while there was a change in inventory. Early 1999, deposits in this sector dropped dramatically as a result of facts that state and provincial-level enterprises had to hand in deposits and the period was the busiest for payment of raw materials bought by enterprises. At the end of March, the deposits had a decrease of 1.849 billion RMB, the lowest of 1999. It became better following that. By the end of the year, the deposits had an increase of 1.939 billion RMB over the start of the year, but a decrease of 823 million RMB over 1998. The situation for fixed deposits of enterprises was much better than the demand deposits. Between Jan. and May, the savings deposits had taken a growth momentum as the year before, with the amount increased by 2.016 billion RMB over the start of the year and a year-on-year increase of 1.29 billion RMB. But, since June, as a result of change of interest rate, the outflow of savings deposits speeded up. By the end of the year, there was only an increase of 1.29 billion RMB. Since May, savings deposits decreased rather than increase by 726 million RMB compared with that at the end of May. In addition, there was a change in the structure of saving deposits with 87% of the volume increased for demand deposits and 13% for fixed deposits. The stability of savings deposit was weakened.

Loans in RMB continued to grow and the sectors they went to were optimized. By the end of the year, the loans totaled 43.526 billion RMB, an increase of 4.741 billion RMB over the start of the year and an increase of 281 million RMB over 1998. The short-term loans amounted to 31.593 billion RMB, an increase of 3.084 billion RMB over the start of the year. The medium-term loans reached 2.389 billion RMB, up 1.303 billion RMB over the start of the year. The long-term loans were 7.311 billion RMB, up 321 million RMB over the start of the year. The loans increased mainly went to major projects, profitable foreign-funded enterprises whose products sold well and consumers. The individual credit went up 1.66 billion RMB, or 35.1% of the total volume increased.

The input of cash increased by large margin and a record input was registered. In 1999, the cash receipts totaled 111 billion RMB, a year-on-year increase of 5.11 %. The cash disbursements reached 113.7 billion RMB, an increase of 7.35%. As a result, the net input was 2.753 billion RMB, up 2.385 billion RMB of 1998 and a record high. Incomes from sales of products, savings deposit and service industry with year-on-year increases of 7.22%, 9.28% and 14.28% respectively contributed mainly to the total cash receipts. Wage expenditure, administration fees of administrative organs, institutions and enterprises, and the withdrawal of savings deposit with rises of 3.73%, 26.45% and 12.08% respectively were main factors behind the input of cash. The expenditure over purchase of agricultural products and by-products had the largest increase of 78.88%.

Foreign exchange deposit was up while the foreign exchange loan was down. Surplus was registered in settlement of exchange. As a result of the gap between RMB interest rate and foreign exchange one, the foreign exchange deposits were slightly increased. By the end of the year, the foreign exchange deposits amounted to 1.061 billion USD, an increase of 231 million USD, among which the savings deposit was up 127 million USD over the start of the year. As a result of high cost and weak demand, foreign exchange loans saw a decrease of 310 million USD over the start of the year. Since the start of 1999, all banks in Xiamen remained a surplus in terms of settlement of exchange. By the end of that year, the volume of settlement amounted to 2.778 billion USD, up 3.51%. Deals of selling reached 2.12 billion USD, down 33.8%. A surplus of 658 million USD was achieved in terms of settlement of exchange. The deficit of last year over the same period was overwritten.

II. Improve financial service to support the local economy.

In 1999, financial departments in Xiamen carried forward to the letter the state financial policies and made full use of financial instruments to guarantee the economic target for the city. That year, People's Bank had granted re-loans of 3.57 billion RMB and re-discounts of 720 million RMB, provided guidance in credit input for banking institutions and optimized the structure of loans-granting. The financial institutions, on one hand, increased loans to provide major support of large and medium-scale state-owned enterprises, foreign-funded enterprises, infrastructure developments and new and high-tech industries. Special attention was also paid to consumer loans for real estate. All these had boosted the national economy and optimized the economic structure. On the other hand, they cut red tape to support superior ones and bettered their financial services by opening new business and using new financial instruments including comprehensive crediting, acceptance bills, letter of credit, discounted commercial bills of acceptance. At the same time, electronic construction of banking sector made further development with the use and upgrading of Bank-Security Pass, One Card for Major Fees and POS systems. They led to increase of trade volume, rise of efficiency and a drop of errors and were helpful to the users. One major task in 1999 to take precautions against financial risks was to solve Year 2000 Computer Bug Problem. All the banking departments had attached great importance to it and measures were taken. Three shut-down tests on computer were successfully conducted and emergency plans were made, which led to solution of the bug problem. The same time, the financial institutions provided quality service, they overcame disadvantages including the cut of interest rate and achieved satisfactory economic benefits.

III. Make full use of all forces available to guarantee the construction of a safe financial area in Xiamen.

In 1999, a leaders' team was set up for that purpose and related authorities including the municipal government, the People's Bank, the Public Security Bureau, Courts and the Industrial and Commercial Administrations and all banking institutions shared respective responsibilities and joined forces in the construction. Supervision was tightened up, the financial cases or problem were investigated and the review of the management in financial sector was strengthened. With these, operational risks of some banking institutions were prevented. Campaigns were launched by related government organs to crack down illegal financial activities and maintain a sound financial order in Xiamen. The related authorities also tightened up the management of financial creditor's rights. All the financial institutions signed the Xiamen Pact for Management of Financial Creditor's Rights in order to crack down upon dodges of creditors. Under the pact, the financial institutions co-operated in protecting the rights of creditors. They also established systems for enterprises with high risks to report on major decisions and the list of enterprises with bad reputation was exposed. Education on financial laws and regulations was strengthened. All financial institutions were organized to study laws and regulations including Punishments for Violations of Financial Laws and Regulations. The same time they developed step by step, they also used the legal weapons to protect the rights of the creditors and guarantee the financial safety. Joint Pact on Bank Cards was signed to strengthen the co-operation among them. Under the pact, fair competition was encouraged and the issuing of cards was standardized. At the same time, a system of 110 Personal Records was set up to appraise the applicants and expose the holders of bad reputation in order to maintain a healthy and fair card market.

IV. New services were explored to meet the demand of customers.

In 1999, the financial departments made efforts in raising the standard of service and explored new services in order to meet the demand of the customers. With the operation of Golden Card Network linked to the state bank card center, Xiamen had become the 4th pilot city following Shanghai, Hangzhou and Jinan in this sector. Commercial banks here were actively involved in offering new financial business. For instance, China Industrial and Commercial Bank Xiamen Branch had three breakthroughs in exploring the consumer loans service, that is, breakthroughs in amount of loans, usage of loans and guarantees for personal consumption loans. China Agriculture Bank Xiamen Branch previously gave major support to real estate development. And in 1999, it gave major support to real estate consumers and expanded the share of consumer loans in the loans for housing-related projects. And a "Green Channel" was created for that purpose. Bank of China Xiamen Branch offered to customers a new phone center facilitating not only the prompt transfer and consultation of accounts, but also services including personal foreign exchange trade, money transfer to stock market, fax and consultation of bank reports, loss report, and consultation of interest rate and exchange rate. Customers could management their money without going to banks. China Construction Bank Xiamen Branch set up the first business consultation center for customers, 13 hours a day. On September the first, with the application of high technology, it initiated new counter service enabling the customers to go through all related business under a single window of service. It was a reform to the traditional operation of counter service and came closer to the operations of international commercial banks.

V. Foreign exchange management strengthened and service in this sector improved.

Xiamen Foreign Exchange Management Bureau put into operation in due time Check System for the Customs Declarations in order to crack down on obtaining large sums of foreign exchange without state authorization and strengthen the supervisions over foreign exchange under current account. The management of foreign exchange under capital account was strengthened too and trading of foreign exchange for paying back foreign debts was conducted in line with laws and regulations. The registration and appraisal system was established and improved for foreign debts and a statistic and check system for foreign debts was improved to prevent and solve the risks of foreign exchange and foreign debts. Checks were still the key part of statistics work of balance of payments and the implementation of Liaison Forms for Checks of Balance of Payments filled in on a monthly feedback basis had guaranteed the precision, integrity and efficiency of figures. 100% of the international income was reported and 99.8% of the international expenditure was registered. Greater efforts were made to dispose the foreign exchange collectable in the routine verification and write-off of import and export. As a result, the volume of foreign exchange collectable was the record low over recent years. In addition, support was given to foreign trade in Xiamen. 55 enterprises which registered exports valued over 8 million USD, had a verification and write-off rate of over 90% and was with no bad records were granted tiles of Reputable Enterprises in Terms of Foreign Exchange Earnings. They were also able to enjoy 8 preferential policies including the priority to receive loans from international commercial banks. To facilitate the development of Xiamen-invested enterprises in other countries and regions, 7 major steps including checks of investment risks and source of foreign exchange capital had been taken to improve service. They had provided a sound foreign exchange environment for the development of export-oriented local economy.

Insurance Sector

Investment Opportunities for Xiamen Insurance Market

1. The current situation of Xiamen insurance market
In 1999, Xiamen insurance market is mainly made up of four insurance companies, which are, respectively, Xiamen Branching Company of Chinese People's Insurance Company, Xiamen Branching Company of Chinese Life Insurance Company, Xiamen Branching Company of Chinese Pacific Insurance Company, and Xiamen Branching Company of Zhongping'an Stock Limited Company. Among this, there are 25 operative insurance institutions, 20 insurance agencies in rural area, and 707 agencies, 3100 insurance staff members, of which the number of individual insurance trustee is 2300. There are three more agencies, which are, respectively, Xiamen Agency of American Hengfu Product Insurance Limited Company, Xiamen Agency of Hongkong Minan Insurance Limited Company, and Xiamen Agency of Philippine Zhonghua Insurance Limited Company.

Currently, due to the efforts of insurance supervisory departments and insurance companies, Xiamen has entered the stage of steady development from the early stage of rapid development, and insurance business is advancing steadily. In 1999, the insurance premium of Xiamen broke the point of £¤1 billion and reached £¤1.026 billion, which increased by 4.72 % and £¤0.046 billion more than that of last year. The yield of property insurance business is £¤0.443 billion, which is 2.15% more than that of last year; the yield of life insurance business is £¤0.594 billion, which is 2.15% more than that of last year; the yearly yield of property insurance claim is £¤0.334 billion, which is £¤0.138 billion more than that of last year and increased by 67% on the same ratio scale; the deadline payment of life insurance is £¤0.19 billion, which is £¤25.78 million more than that of last year and increased by 15.73% on the same ratio scale.

In 1999, the GNP of Xiamen is £¤45.829 billion, and the insurance depth is 2.25%, which is twice the average standard of the whole country; by the end of 1999, the number of Xiamen population reaches 1.2899 million, and the insurance depth is £¤823, which is twice the average standard of the whole country. The deposit balance of all items of the financial institutions in the whole city is £¤49,737 billion, of which the insurance yield is 2.08%; the savings balance of urban and rural residents is £¤21.037 billion, of which the insurance yield is about 4.91%.

2. Prospects for Xiamen insurance market

From the perspective of macro-analysis, continuous development in the second industry supported by joint-venture enterprise, the third industry supported by tourism, architecture, real estate industry, harbor industry, finance industry and the construction of fundamental facilities will widen the insurance coveruge. Although the insurance depth and insurance density in Xiamen is higher than that on the average national standard, compared to the insurance density of more than $200 and the insurance depth of 4% in other developing countries, however, Xiamen still has a long way to go and there is great potentiality for the development of Xiamen insurance market. From the perspective of micro-analysis, increase in the income of urban and rural residents in Xiamen and the enhancing awareness of insurance will also stimulate the increase in insurance consumption. In the structural adjustment of insurance varieties such as investment or dividend life insurance, motor vehicle insurance, import and export insurance and family property insurance, there is also a lot of work to do.

3. Conditions for establishing foreign insurance companies in Xiamen

1) Operation sanctions
Foreign insurance companies applying to be established must meet the following requirements: having a 30-year operation history, having two-year experiences of serving as agencies and the total capital one year before the application should be no less than $5 billion.

2) Organization forms
It is generally required in our country that foreign life insurance company should first set up joint-venture life insurance company when entering Chinese insurance market, and the share-holding proportion should not be more than 51%; foreign property insurance company can set up both joint-venture insurance company and the branching insurance company when entering Chinese insurance market.

Over past few years, rapid development was achieved in Xiamen's insurance sector. The year 1999 saw a stable and more standardized operation in this sector. With the joint efforts of the management department and all insurance companies, good results were made in lessening risks and maintaining a fair market. Currently, there were four insurance companies with a total of 25 branches or offices in operation, that is, China People's Insurance Xiamen Company, China Life Insurance Xiamen Company, China Pacific Insurance Xiamen Company and China Ping'an Insurance Xiamen Company. In addition, there were offices of foreign-funded insurance companies approved by China People's Bank such as The Hartford Financial Service Group Xiamen Representative Office, Minang Insurance (H.K) Ltd. Xiamen Representative Office and the Philippines Malayan Insurance Inc. Xiamen Representative Office. There were also 707 insurance agencies approved by China Insurance Supervision and Management Commission. The workforce in this sector amounted to 3100, among which 2300 were individual agents.

I. Basic information on the insurance companies.

All the insurance companies maintained a sound operation. The premium totaled 1.03739 billion RMB, an increase of 47.89 million RMB over 1998, up 4.8% (among which, income from property insurance came to 443.05 million RMB, an increase of 35.26 million RMB over 1998 or 8.6%; income from life insurance amounted to 594.34 million RMB, an increase of 12.63 million RMB over 1998 or 2.2%). The total insurance indemnity was 362.34 million RMB, an increase of 166.62 million RMB over 1998 or 85% (among which, indemnity from property amounted to 334.36 million RMB, an increase of 152.14 million RMB or 83%; indemnity from life insurance was 27.98 million RMB, an increase of 14.48 million RMB over 1998 or 107%). In 1999, about 2.3% of the local population took out insurance policy to an amount of 843 RMB per capita, higher than the average national level. The insurance sector maintained a stable growth momentum. The amount insured for economic construction and social stability reached 1259.3 billion RMB. That year, a total premium of 362.34 million RMB was made while another 222.48 million RMB was provided at the maturity of insurance contracts. The insurance had played an important role in compensating economic losses. In particular, when the 14th Typhoon hit Xiamen and resulted huge losses in property. All insurance companies were actively involved in offering some 100 million RMB worth of indemnity.

II. Development of insurance market.

The day of China's accession into WTO was closer and the domestic insurance companies had met pressure and challenges they never had before. In 1999, the fierce competition still existed in Xiamen's insurance market. But, all insurance companies had strengthened the communication and co-operation through the competition. All paid special attention to self-discipline and made efforts in creating a fair competitive market to grow. On the basis of co-operation in aviation sector, life insurance companies had strengthened exchanges of information. Furthermore, the insurance companies exposed the list of insurance salespersons who broke the related laws and regulations in order to improve the quality of staff and raise the image in public. The property insurance companies also strengthened co-operation and exchanges and reached common sense on a range of issues including insurance value and terms related to motor vehicles. They shared responsibilities in maintaining a fair market.

To compete with foreign counterparts, the management authorities and the operators all made precautions against risks and sharpened their competitiveness. The Insurance Supervision Department had tightened up the control and perfected the related laws and regulations. All the companies, when exploring new business, tightened up internal management and move a step towards international practice. China Life Insurance Xiamen Company had been the national leader in getting ISO9002 certification which led to improvement in internal management and raising of competitiveness and image in the public.