Shanghai, November 12:

China is gearing up to open its financial services market in line with its World Trade Organisation (WTO) commitments, but analysts say the new rules are likely to fetter foreign banks’ full participation in the sector.

Beijing gave the green light this week to long-awaited draft regulations on foreign lenders operating in the country, a move meant to fulfill China’s promises made to the WTO when it joined in December 2001.

China’s State Council or cabinet has yet to provide specifics, but previous drafts circulated in the Chinese press point to a host of stiff conditions that are unlikely to make the sector an even playing field. “China wants to control the opening of its banking system,” said Yan Mei, a senior banking analyst at Moody’s Investor Service in Hong Kong. “Foreign banks will want to have fewer constraints but the restrictions will be there.”