Chinese Vice Premier Wang Qishan and the UK Chancellor of the Exchequer George Osborne concluded the meeting of the third China-UK Economic and Financial Dialogue on 9th November, 2010, in Beijing, China. The two sides agreed upon a series of policy outcomes, one of which refers to the important role of self regulatory organization in financial market. It is announced that “Both sides recognize the important role played by self regulatory organizations in some financial markets and agree to expand cooperation in this area. Under the framework of a Memorandum of Understanding, the National Association of Financial Markets Institutional Investors (NAFMII) and the International Capital Market Association (ICMA), agree to develop a detailed programme of mutual cooperation and exchange of relevant information on debt capital market issues; with a focus on collaboration in such fields as strengthening market standardization and enhancing standards of best market practice.”

The full policy outcomes at the Dialogue are as follows:

1. Chinese Vice Premier Wang Qishan and the UK Chancellor of the Exchequer George Osborne concluded the meeting of the Third China-UK Economic and Financial Dialogue on 9th November, 2010, in Beijing, China. The two sides committed to strengthening their macroeconomic policy coordination, enhancing cooperation in the financial sector, trade and investment, green development and global economic governance, to promote their economic relations and support the global economic recovery. The two sides agreed the following policy outcomes:

Promoting strong, sustainable and balanced growth

2. Both sides recognized that the global economic recovery is proceeding but remains uneven. Both sides are committed to a shared responsibility to secure strong, sustainable, and balanced growth in a collaborative and coordinated way. Both sides pledged to continue implementing economic policies conducive to sustainable economic growth. The UK has committed to a clear, credible, ambitious and growth friendly medium-term fiscal consolidation plan which will ensure fiscal sustainability. China is committed to accelerating the transformation of its economic development pattern and restructuring to further strengthen the role of domestic demand in driving economic growth. This action by both sides will support confidence and mitigate risks to recovery. Both sides support the consensus reached by G20 Finance Ministers and Central Bank Governors at Gyeongju, Korea on promoting external sustainability. Both sides agreed to further strengthen bilateral cooperation, and cooperation through the G20 Framework for Strong, Sustainable and Balanced Growth.

Strengthening Cooperation on Global Issues

3. Both sides strongly support the G20 as the premier forum for their international economic cooperation, in which the world’s major economies work together to support their mutual aspirations and ambitions.

4. Both sides reiterated their support to achieving the Millennium Development Goals. Both sides reaffirmed the importance of, and called for international support for, an ambitious IDA-16 replenishment to allow the World Bank to continue to provide concessional financing to least-developed countries.

5. Both sides welcomed the ambitious agreement reached by G20 Finance Ministers & Central Bank Governors at Gyeongju, Korea, to reform the IMF’s quota and governance that will help deliver a more effective, credible and legitimate IMF, and enable the IMF to play its role in supporting the operation of the international monetary and financial system. Both sides agree that the heads and senior management of the International Financial Institutions should be appointed on merit, with no regards for nationality and that IFI staffing should be diversified.

6. Both sides recognized that climate change is one of the greatest challenges of our time and that, while ensuring the economic and social development of developing countries, moving to a low carbon economy is an opportunity to promote continued economic growth and sustainable development. Both sides therefore reaffirmed their commitment to the provisions and principles of the United Nations Framework Convention on Climate Change and its Kyoto Protocol. Both sides agreed to reflect the political agreements made in the Copenhagen Accord into the negotiation process and to work together to reach a balanced package of decisions at Cancun in an effort to build a solid foundation for further progress in future.

Promoting trade and investment

7. Both sides agreed to further promote bilateral trade and investment, including in high technology and infrastructure. Both sides committed themselves to taking concrete actions to facilitate increased trade and investment. The UK is already one of the most open economies in the world to trade and inward investment and welcomes more Chinese investment, including from sovereign wealth funds.

8. Both sides will uphold the principles of free trade and resist all forms of protectionism. Both sides welcomed the consensus reached by G20 Finance Ministers and Central Bank Governors at Gyeongju, Korea to continue to resist all forms of protectionist measures and seek to make significant progress to further reduce barriers to trade. Trade defense instruments should be used with restraint by all countries and used only in ways compatible with WTO rules. Both sides will continue close cooperation to work for a comprehensive and balanced conclusion to the Doha Development Round, locking in the progress already made and attaining the development objectives of the Round. There was recognition of 2011 as a key window of opportunity for achieving this and that an agreement would provide a real boost to the global economy and act as an insurance policy against protectionism.

9. UK reaffirms its support for China’s full market economy status at as early a date as possible and will continue to play a constructive role to encourage EU recognition.

10. Both sides recognize the importance of effective protection of intellectual property rights to promote innovation and encourage bilateral trade, especially in high-technology goods and services. The Chinese and UK agencies responsible for intellectual property administration and enforcement have productive relationships, and have launched ambitious plans for deepened technical collaboration in 2011.

11. Both sides agreed to establish working-level dialogue to discuss tax issues encountered by businesses engaged in bilateral trade and investment. Both sides recognized the important role of tax transparency and information exchange for tax purposes in improving transparency and strengthening international cooperation. Both sides agreed to enhance their communication and exchanges on tax transparency and information exchange, in particular through the Global Tax Forum. The UK welcomed the Chinese representative to the Joint International Tax Shelter Information Centre in London.

12. The national statistics organizations of China and the UK agree to exchange views on measures to enhance the quality and coherence of, and public confidence in, national statistics.

13. Both sides agreed to continue strengthening trade and investment cooperation in Chinese regional cities, and jointly implement the Memorandum of Understanding on Strengthening Trade and Investment Cooperation in Chinese Regional Cities between the Ministry of Commerce of China and the UK’s Department of Business, Innovation & Skills. Both sides agreed to continue sharing information and promoting commercial opportunities in China’s regional cities.

14. Both sides agreed to strengthen bilateral trade and investment in chemical industry. Both sides will conduct timely communication on their respective chemical industry policies and trade and investment opportunities. UK Trade & Investment and relevant chemicals industry trade bodies are willing to help China Petroleum and Chemical Industry Federation seek potential suppliers of fine chemicals and related production technology.

15. Both sides agreed to strengthen cooperation in quality supervision and collaboration under the framework of the International Organization for Standardization (ISO) and the International Electro technical Commission (IEC).

16. Both sides agreed to support and facilitate enhanced partnership between UK and Chinese companies around business opportunities and projects in third markets.

17. Both sides agreed to review their bilateral aviation arrangements with a view to further enhancing aviation relations between the two countries. The two sides are committed to holding formal consultations on bilateral aviation issues in April 2011.

18. Both sides will capitalize on the opportunities provided by the recent agreement on expanding the Smart and Secure Trade Lanes Pilot between the EU and China. The UK and China have already earmarked possible new ports to include, and businesses to involve. Successful implementation will deliver greater certainty and predictability for importers and exporters. As this ground breaking approach is being monitored around the world, China and the UK, along with other EU partners, recognize the importance that finding better ways to facilitate trade will have on the prospects for future global growth.

19. Both sides welcome each other’s energy companies to increase investment and participation in their respective energy sector development, and agreed to strengthen cooperation in third markets.

Financial Sector Development and Regulation

20. Both sides agree on the important role that continued financial market reform and opening up can play in supporting the global economic recovery and sustaining growth fuelled by domestic demand. Both sides reiterate their commitment to work together to drive forward the reform of international financial regulation and supervisory standards, strengthen transparency and accountability in the financial sector, and to implement agreements reached in the G20, Financial Stability Board (FSB), Basel Committee on Banking Supervision (BCBS), International Organization of Securities Commission (IOSCO), and International Association of Insurance Supervisors (IAIS). Both sides also welcome the agreement reached by Governors and Heads of Supervision to strengthen international prudential standards, which strikes an appropriate balance between increasing financial stability while supporting strong and sustainable economic growth. Both sides agree on the need for the G20 to agree a robust framework for dealing with systemically important financial institutions, include measures to ensure greater loss absorbency capacity and resolution. Both sides agree that there is a role for macro-prudential regulation in improving the overall resilience of the financial system and enhancing macroeconomic stability by addressing aggregate risks and vulnerabilities in the system.

21. The Bank of England and People’s Bank of China agree to deepen their cooperation on financial stability issues and international monetary and finance systems, including through the cooperation in the Financial Stability Board and their annual Dialogue.

22. The FSA, CBRC, CSRC and CIRC welcome the existing strong bilateral supervisory ties. All are committed to continue to build on these ties and on the good cooperation in multilateral regulatory standard setting fora. FSA and CBRC agree to enhance their ongoing cooperation through a new annual bilateral dialogue on regulatory issues (such as stress testing, liquidity regulation, systemically important financial institutions, cross-border supervision, and Basel III implementation), supporting their existing strong bilateral supervisory ties and good cooperation in multilateral fora.

23. China and the UK agree to renew and expand their unrivalled programme of bilateral technical collaboration and joint research on financial sector reform and development, specifically on:

a) SME financing;

b) consumer protection and education;

c) non-bank lending and consumer finance;

d) reform of capital account management;

e) corporate and government bond market development;

f) shadow banking;

g)development of the offshore renminbi market;

h) transaction technology, clearing systems, and data management;

i) innovation and development of notes market.

24. Both sides agreed to strengthen regulation of credit rating agencies and work together to require credit rating agencies to develop methodologies in an objective and rigorous manner and apply them consistently.

25. The UK welcomes Chinese financial institutions seeking independent regulatory approval to conduct business in the UK. China agrees to support the expansion of qualified UK financial institutions in China. Both sides agree that the further deepening of financial services ties between the UK and China will benefit both sides.

26. The UK continues to welcome the broader adoption of the China UnionPay Card subject to the usual independent and appropriate regulatory guidelines. China agrees to support the UK’s relevant institutions to participate in China’s bankcard market based on the principles of equality and mutual benefit.

27. Both sides reiterate their support for qualified Chinese companies, including listed companies, to list in London through the issuance of shares or overseas depositary receipts.

28. Both sides welcome the progress made by CSRC in drafting the rules and regulations for qualified foreign companies, including UK companies, to list on China’s stock exchanges.

29. Both sides agree to explore the possibility of cross-listing Exchange-Traded Funds on their respective markets under the framework of the Qualified Foreign Institutional Investor and Qualified Domestic Institutional Investor schemes.

30. Both sides continue to support each other’s financial institutions to conduct relevant financial businesses, including bond issuance and underwriting, in their respective financial markets. With the principle of fairness, impartiality and openness, China will soon launch a market-oriented evaluation system for the underwriting of non-financial enterprises debt instruments in the Chinese inter-bank market. China will allow foreign-invested banks to join the system and, contingent upon evaluation result, allow foreign-invested banks to conduct bond underwriting business based on prudential and national treatment principles.

31. UK welcomes and supports the planned expansion of the State Administration for Foreign Exchange (SAFE) office in London, subject to relevant UK laws and regulations.

32. Both sides recognize the important role played by “self regulatory organizations” in some financial markets and agree to expand cooperation in this area. Under the framework of a Memorandum of Understanding, the National Association of Financial Markets Institutional Investors (NAFMII) and the International Capital Market Association (ICMA), agree to develop a detailed programme of mutual cooperation and exchange of relevant information on debt capital market issues; with a focus on collaboration in such fields as strengthening market standardization and enhancing standards of best market practice.

33. The City of London Corporation and the Shanghai Government agree to renew their Memorandum of Understanding, deepening their technical collaboration on financial and professional services issues and supporting the further growth of these two financial and shipping centres.

34. China encourages Chinese financial institutions to become full members of the London-based International Centre for Financial Regulation (ICFR). UK and Chinese Governments welcome the planned ICFR forum on reform of international financial regulation in Beijing in 2011.

35. Both sides welcome a number of commercial deals which further strengthen the commercial financial services relationship between our two countries, in particular:

a) The approval of securities joint venture of Royal Bank of Scotland Group Public Limited Company and Guolian Securities Co.Ltd;

b) The granting of a QFII quota to Aberdeen Asset Management.

c) The bancasurrance partnership between Standard Life and Bank of China (which is subject to final conclusion of the commercial negotiation).

Promoting Green Development and Energy Efficiency

36. Both sides agreed that low-carbon growth is key to energy security as well as vital for prosperity and tackling climate change. Both sides welcomed the agreements reached in the UK-China Energy Dialogue as set out in the conclusions paper, and agreed to strengthen mutually beneficial policy and business cooperation and to promote future joint working.

37. According to the UK-China Joint Declaration on Climate Change of 2008, both sides agreed to strengthen bilateral policy dialogue and exchange on topics including the use of fiscal measures and market mechanisms to promote low-carbon development and energy efficiency. The UK (DEEC) and China (NDRC) agreed that these topics would be included in a new strand of cooperation activities under the Declaration aimed at sharing practical know-how and policy expertise between the UK and China’s Low-Carbon Pilot Provinces and Cities. Both sides noted the strong cooperation that already exists between the two countries on research into adaptation and mechanisms of technology transfer.

38. Both sides agreed to renew the Sustainable Cities Imitative memorandum of understanding between China’s Ministry of Commerce and the UK’s Department of Business, Innovation and Skills, continue their cooperation on sustainable cities through the three cities of Wuhan, Chongqing and Changsha, and consider gradually extending it to other cities. Both sides agreed to further intensify their cooperation in the fields of low-carbon, energy conservation and environmental protection.

39. Both sides agreed to expand pragmatic cooperation in environmental protection to support green growth.

40. Both sides agreed to intensify exchanges and cooperation in industrial energy-efficiency improvement, and promote cooperation between enterprises of both sides in compliance with market mechanisms.

41. HM Treasury and Department for Energy & Climate Change on the UK side and the National Development & Reform Commission and People’s Bank of China on the Chinese side agreed to strengthen policy exchange on domestic frameworks for stimulating green investment and low-carbon financing.