The Bush administration's economic team is expected to argue for a quickening pace of China's financial market reform, and push the country wide open to foreign banks, investment firms and insurance giants.

U.S. Treasury Secretary John Snow and the Federal Reserve chairman Alan Greenspan are leading a strong economic delegation visiting Beijing, who are sitting face to face on the table with Chinese economic officials on Sunday in the annual joint Sino-American economic conference.

U.S Treasury Department senior officials say the plan for the Chinese is part of an comprehensive Washington bid to put the Chinese currency yuan into a broader debate over China's reliance on exports as the main engine of economic growth, the New York Times reported.

The plan calls for Beijing to speed up the privatization of state-owned companies, including banks; to develop a Chicago-style futures market for currency trading; to establish an independent credit-rating agency; and to crack down on bailouts for banks left holding bad loans.

"What we tried to do is take a quantum leap in sophistication and scope," said Timothy D. Adams, undersecretary for international affairs at the Treasury Department. "It gives you a picture of the truly complex nature of what we are trying to do."

Though many of the ideas are not fresh, and often supported by Chinese leaders in principle, the list reflects an increased effort to lecture Chinese officials about its internal financial issues, which could backfire, the New York Times reported.

Under current Chinese laws, foreign investors are prohibited from owning more than 25 percent of a commercial bank, and no single foreign investor can own more than 20 percent.

According to a document that Treasury officials plan to circulate among Chinese officials, the Bush administration would persuade Beijing to remove the limits on foreign ownership of its banks.

Also, foreign financial institutions that want to buy Chinese securities would be freed from having to have at least $10 billion in assets and to have been in business at least five years. Foreign-affiliated banks, brokerage firms and insurers would be freed from restrictions on setting up multiple branches at one time.

Secretary Snow has been arguing that China needs to learn from the Americans to get people to spend more and save less. Administration officials say that a financial overhaul plan would help make that happen in China.

Andrew Rothman, a Shanghai-based strategist at CLSA Asia-Pacific, a brokerage firm, said that China had already embraced many of the ideas that Secretary Snow was promoting and that consumer spending has grown sharply in the past few years.

Retail sales in China have been climbing about 10 per cent a year for the past several years, he said. Household credit, virtually nonexistent five years ago, now accounts for 16 per cent of all outstanding credit.

Source: chinadaily.com.cn