For Immediate Release April 28, 2005 Statement by the Coalition of Service Industries on China's Implementation of WTO Commitments Ways and Means Committee Hearing The Coalition of Services Industries (CSI) appreciates this opportunity to convey to the Ways and Means Committee the US service industry's concerns about China's implementation of WTO accession commitments. The US has a positive balance in its cross-border services trade with China, and has experienced dramatic growth in its services exports in the last decade. In 1992, US services exports to China were $1.57 billion, with a surplus of $52 million. In 2003, US services exports to China increased to $6 billion, with a positive balance of $2 billion. Our largest exports to China are in travel, transportation, education, financial, business and professional services. Services sales by US affiliates in China have grown from $320 million in 1994 to $3.4 billion in 2002. By contrast, China’s sales through affiliates in the US increased from $45 million in 1994 to $125 million in 2002. China's WTO accession in 2001 was a significant step in advancing services trade liberalization and promoting sectoral reforms through ambitious and comprehensive WTO obligations. These obligations demonstrated the Chinese government’s intention to modernize and integrate economically with the rest of the world. However, the true value of China’s commitments is to be measured by the degree to which they are implemented. Although China has made efforts to bring its legislation into WTO compliance, significant sectoral and cross-sectoral implementation issues persist. Cross-Sectoral Issues Excessive Capitalization Requirements We acknowledge China's efforts to reduce required capitalization levels in insurance in response to the US industry study “A Recommendation for Revisions to the Capitalization Requirement Rules for Life Insurance Companies Operating in China.” However, more progress is needed since the capitalization requirements remain high given assumed risks and international practices. Chinese regulators have also imposed high capital requirements that bar market access in other key services sectors, including asset management, telecommunications, freight forwarding and logistics. CSI members believe such restrictions hurt the interests of US companies and impede the expansion of China's economy. High capitalization requirements are not an effective way to ensure financial solvency. They prevent the efficient use of scarce capital, thus hindering the sound development of China's services sectors. Emergency Safeguard Authority China has made important legislative changes intended to implement its WTO commitments, including the Foreign Trade Law that came into force on July 1, 2004. However, we are concerned that Article 45 of the Law permits the use of emergency safeguard measures (ESMs) against services imports. ESMs for services are not provided in China’s terms of accession, and we strongly oppose any efforts to employ a services safeguard mechanism. Transparency According to the General Accounting Office report “US Companies’ Views on China’s Implementation of Its Commitments,” of March 24, 2004, US companies consider China’s commitments in transparency of laws, regulations, and practices among the most important. Despite China’s extensive transparency commitments, US companies have been denied the right to comment on new regulations, or have been unable to do so because comment periods have been too short. Rather than specifying all criteria that foreign firms must satisfy, China’s rules sometimes provide regulators with broad discretion which results in varying rules and decisions. Chinese laws, regulations, and administrative practices frequently change without warning, and may not be applied uniformly, especially at the local level. Government Procurement China should eliminate significant market access barriers in its software procurement. Unfortunately, China has recently enacted a procurement law that requires that the Chinese government purchase domestic goods and services with limited exceptions. This law has the potential to exclude US goods and services providers from the significant public sector market. China’s draft “Implementation Measures for Government Procurement of Software” is the first of a series of sectoral rules to implement the new government procurement law. These regulations will create a discriminatory procurement regime that will severely restrict or exclude most non-Chinese companies from selling software products and services to the Chinese Government, China’s largest buyer. These regulations represent a step back, and go far beyond US procurement practices. China’s proposed rules will clearly discourage development of a strong Chinese software sector by isolating it within a protected market. The government procurement law and the Implementing Measures move in the opposite direction from China’s unfulfilled WTO accession obligation to start negotiations for membership in the GPA. The Chinese Government should adopt an open, inclusive, non-discriminatory and transparent procurement regime by commencing negotiations to accede to the GPA and suspending adoption of the Implementation Measures and other discriminatory procurement rules. Intellectual Property Rights Protection China’s piracy and counterfeiting at the wholesale and retail levels, end-user piracy, and Internet piracy remain rampant due to lenient penalties, uncoordinated enforcement among local, provincial and national authorities, and the lack of transparency in administrative and criminal enforcement. The piracy rate for optical media products and software is reported to be in excess of 90 percent. Although recent copyright amendments and regulations made progress toward bringing Chinese law into compliance with TRIPS, the law still provides inadequate criminal liability for copyright offenses, e.g. corporate end-user and Internet piracy, unclear protection for temporary copies, and overly broad exceptions to protection of computer software. Overall, the issue of IPR protection is marked by a readiness of the central government to address the problem, while implementation at local levels remains unsatisfactory. IPR Enforcement Regime Chinese agencies should better coordinate to improve enforcement of administrative and criminal measures. There has been some success in bringing civil actions, however China’s criminal law has rarely been used to prosecute piracy because of the high thresholds for criminal liability. Administrative enforcement is slow, cumbersome, and rarely results in deterrent fines. Although Chinese authorities have undertaken administrative enforcement actions against pirates, the government’s refusal to share information about the activities of CD plants and about the ultimate outcomes of its actions makes it difficult to assess China’s efforts. Copyright authorities are typically understaffed, and lack skills and resources, as well as a mandate to take strong administrative measures. Civil copyright enforcement is also hampered by the courts’ unwillingness to grant provisional remedies on an ex parte basis, even though the amended law now authorizes such remedies. Criminal prosecution of copyright piracy remains restricted by the Chinese criminal code which requires a demonstration that piracy is occurring for the purpose of making a profit. This is very difficult to demonstrate, particularly if it happens online. Therefore, China should closely adhere to TRIPS which requires criminalization of “copyright piracy on a commercial scale”- not just piracy for profit. Unfortunately, the recently amended Supreme Court’s Judicial Interpretations (JIs) have failed to establish an acceptable framework for criminal prosecutions and deterrent penalties for IPR violations. The new JIs make only minimal decreases in the monetary thresholds, and leave damages to be calculated at pirate prices. The new threshold may be effective only if it brings more criminal cases against pirate manufacturers and distributors. Under the new rules, online infringements that meet the thresholds are criminalized, but the ability to use these rules in practice has yet to be tested. Although the rules criminalize importing and exporting of pirate products, criminal penalties are very low, since liability results from China’s rules covering “accomplices.” End user software piracy does not appear to be criminalized, and the rules are weak with respect to repeat offenders. The local copyright authorities and the local administration should cooperate to ensure adequate administrative enforcement against all types of copyright offenses, including unauthorized use of software by companies. Chinese authorities at the national and provincial levels should also conduct aggressive investigations to trace the source of pirate optical disc production, impose criminal sanctions on pirate producers and distributors, and institute a zero tolerance policy for the sale of infringing materials. Chinese customs must be directed to refer large-scale pirate seizures for criminal prosecution. China’s internet piracy should be addressed through appropriate legislation and strict enforcement. At the JCCT meeting in 2004, China agreed to join the WIPO “Internet” Treaties, and we look forward to swift implementation of this commitment. To ensure that improvements in China’s enforcement regime yield meaningful gains for U.S. right holders, the industry suggests that the U.S. Government establish evaluation criteria that provide an objective and verifiable mechanism to measure progress in China’s IPR protection. These criteria should assess (i) criminal, civil and administrative enforcement against all forms of piracy and counterfeiting; (ii) end-user compliance with IPR laws; and (iii) government-sponsored public education and awareness programs about the importance of IPR laws. These IPR initiatives, however, will do little to increase market access for U.S. IPR products if China persists in maintaining trade and investment barriers. Market Access for IPR Products Foreign investors’ greater participation in local media companies can help solve China’s piracy problem. Current rules make it difficult for US companies to enter the Chinese market to supply legitimate products, thereby ceding the market to counterfeit producers. Therefore, we encourage China to increase the 49% cap on foreign ownership of distribution and video replication companies. The Chinese government should secure freedom of establishment for foreign investment companies, including pay-television broadcasters. We believe that companies should be able to choose the form of commercial presence that best suits their operations and business objectives. China should increase revenue sharing beyond 20 films, eliminate the import monopoly and the distribution duopoly; eliminate or reduce the ”black-out” periods for foreign film screening; and reduce taxes and fees. Prime-time broadcast restrictions for foreign programming of pay and non-pay television broadcasters should also be reduced. An improved regulatory and licensing regime is essential in combating IP piracy. China’s censorship clearance procedures for optical media should be streamlined. These procedures give another advantage to pirate producers by severely hindering timely distribution of legitimate CD, VCD, and DVD products in China. Restrictive licensing policies on retail outlets also inhibit the industry's ability to provide consumers with timely access to legitimate products. Retail chain stores should be granted a national license to distribute CDs and other media products, instead of requiring separate licenses in each jurisdiction. China should also clarify the authority for the issuance of retailers’ AV licenses in home video. China remains a large producer and distributor of high-quality counterfeit software and IT-related products for local and foreign markets. Corporate end-user software piracy and unauthorized loading of software on computers before they are sold are also significant issues for CSI members. Actual increases in China’s purchases of legitimate U.S. IPR products are an important tool to measure progress in improving market access through IPR protection. Technology Standard Setting Issues China’s movement toward adopting unique national technology standards instead of available international standards threatens to become a significant barrier to foreign competition, and to undermine China’s ability to export its own products. CSI greatly appreciates the Administration’s efforts to address the issue of standard setting for China’s wireless local area network (WLAN) encryption. However, the scope of the problem is much broader, since China is developing unique national technology standards across a wide range of products. Voluntary, industry-led, consensus based, and non-discriminatory standards are essential to promote interoperability, competition and innovation. As a general matter, technology standards should not be mandated by governments. Standards, and the technologies they embody, should be allowed to compete in the marketplace. As a general matter, CSI members are concerned about the issues of protection for foreign patents, the inability of foreign companies to be voting members of the standards development groups, and attempts to severely limit compensation for intellectual property rights as the new standards are being developed. We encourage China to participate in international standard setting bodies and to align its standards development with international practice. It is also important to protect intellectual property rights embodied in standards through China’s adoption of rules consistent with international practice. Intellectual property is increasingly important to technology leadership, so it is in both Chinese and US interests to establish clear rules for standards. Sectoral Issues Insurance Since the amendment of China’s Insurance Law in 2003 by the National People’s Congress, China’s Insurance Regulatory Commission (CIRC) has issued several important implementing regulations. These regulations have relaxed China’s initial capitalization and licensing requirements in insurance. Nevertheless, significant market access and national treatment impediments for foreign insurers remain. Branching Following the establishment of an initial branch in a province, insurers seek greater clarity regarding procedures and approvals for establishing subsequent branches, sub-branches, and related entities in the same province. Foreign invested insurance companies should enjoy national treatment, and be able to apply for any number of branch approvals simultaneously at any given time, as well as receive new product licenses without delay. Provisions covering branching in the Administrative Regulations and the Foreign-Invested Implementing Rules are silent on the number of branches a company may apply for at one time, and whether branch approvals will be granted consecutively or concurrently. A number of Chinese companies have received branch approvals on a concurrent basis, even when first establishing their businesses in China. In contrast, no foreign insurance company has received branch approvals on a concurrent basis, including when first establishing their business. National Treatment for Capitalization Requirements After being presented with the US industry study “A Recommendation for Revisions to the Capitalization Requirement Rules…” in 2003, CIRC has substantially lowered its capitalization requirements to RMB 200 million for initial establishment and RMB20 million for each additional branch. However, the new capitalization levels are too prescriptive, and are still much higher than international norms with respect to specific business models and assumed risks. According to the industry study, China’s new capitalization requirements in insurance remain higher than in eleven important Asian markets, and much higher than in the United States and the European Union. China needs to confirm the scope of the initial establishment fee of RMB200 million, and ensure that this includes the right to establish sub-branches without limitation on numbers. China’s prudential reasoning behind the branching capitalization requirements of RMB20 million for each additional branch should also be addressed. Overseas Utilization of Foreign Exchange Funds With respect to CIRC’s “Provisional Measures on the Administration of the Overseas Utilization of Insurance Foreign Exchange Funds” released on August 9, 2004, we are concerned that the threshold for utilization is unjustifiably high. Paragraphs 4 and 5 of the article entitled "Insurance fund move precludes qualified domestic institutional investors (QDII)" states that only the largest companies, which excludes foreign participating companies, are authorized to access overseas fund/equities. These provisions have significant national treatment implications, and should be expanded to allow utilization by foreign participating companies. Group Life “Master Contract Coverage” On December 11, 2004, the CIRC announced that China’s commitments to provide market access in group, health, pension, and annuity insurance had been fulfilled by the deadline set in the WTO. However, CIRC is yet to issue implementing guidelines that identify entities covered under group life “master contract coverage,” and specify qualifying criteria for insurers interested in providing this coverage. Transparency China should give insurance entities a reasonable period to review and comment on proposed new measures. We are pleased that CIRC offered the opportunity for public comment on its “Trial Implementing Rules for the Administration of Foreign-Invested Insurance Companies” and “The Administrative Regulations on Insurance Companies” both issued in 2003, and the Insurance Law issued in the end of last year. However, the opportunity to comment on important sectoral regulations is still rare. Therefore, we encourage the CIRC to allow all interested parties to participate in the entire rule-making process through submission of data, written or oral statements, and arguments, in advance of the issuance and implementation of all regulations. We also welcome the fact that CIRC’s “trial implementation” regulations are open to revision as needed. The U.S. insurance industry fully supports China’s efforts to develop and refine its insurance regulatory system. We remain committed to engaging in positive dialogue with Chinese regulators, and encourage them to consult with US and other international experts as they continue to develop the Chinese regulatory system. Improving the transparency of the rulemaking process as well as maintaining equal application of licensing and solvency rules to foreign and domestic companies is especially important as new regulations are being released. Some new regulations appear to have unreasonable provisions that will put many new entrants at a competitive disadvantage in the marketplace. Specifically, recent regulations allow companies with licenses for more than 8 years to invest in a much broader range of assets than companies entering the market since China joined the WTO. Such arbitrary provisions are inconsistent with China's national treatment commitment and have no prudential rationale. We urge a transparent discussion of their prudential justification. Acquired Rights CSI members seek confirmation that existing direct branches and other insurance company operations may continue, but are not required, to operate under the same conditions and authorities accorded at the time of establishment, whether or not the said condition and/or authority complies with new rules, including operations, financial structure, capital and mode of establishment. China should exempt existing companies from compliance with new rules if such companies choose to maintain their existing status, which should be protected as an acquired right. A company that chooses to maintain its existing status should not be penalized by additional, alternative restrictions on its ability to operate and expand business in China. Any company should be permitted to expand its business into new cities/provinces and into new product lines, including group business, consistent with China's insurance commitments. Restrictions, not based on international norms on the ability to operate and expand business, are counterproductive both for the companies and for the Chinese economy, and should not be applied to new foreign companies, either. CSI and the U.S. insurance industry strongly support the dialogue between CIRC and U.S. insurers under the auspices of USTR and the US Embassy in Beijing, as an important forum to raise sectoral issues. Following the second session in April 2005, we see a template for the dialogue and sincerely hope that the proposed November 2005 meeting will occur as discussed with CIRC and USTR on April 8th. We hope CIRC will also include relevant Chinese Government officials in the discussion on issues of asset management and taxation, as well as invite other global companies to the program. Banking On June 26, 2004, China’s Administrative Measures on Foreign Debt of Foreign Banks in China, which restrict the foreign-currency lending of foreign bank branches and their offshore funding, went into force. These measures will work to the significant detriment of Chinese businesses and borrowers, including Chinese financial institutions, which rely on international banks for an increasing proportion of their financing needs. Under these rules, corporate clients’ foreign-currency denominated loans may not be converted into renminbi. This will discourage renminbi expenses by foreign investors whose presence is otherwise actively sought in the Chinese economy. Foreign banks will also be unable to grant Standby Letters of Credit in foreign currency to Chinese banks in order to allow corporate clients to borrow renminbi loans from these banks. The measures also introduce a quota which limits foreign-currency refinancing of foreign banks in China from their head office and offices in third countries. These restrictions are especially damaging, since China’s domestic inter-bank market for foreign currency is almost non-existent and foreign bank branches are heavily dependent on funding from their head offices or offices in third countries. Although identical restrictions are applied to domestic banks, their negative effect on foreign banks will be much larger. Foreign banks have little access to the renminbi market, and their clients are more internationally oriented, with a greater need for flexible foreign exchange transactions. Securities and Asset Management On December 21, 2001, the China Securities Regulatory Commission (CSRC) issued the Joint Venture Rules for asset management companies, which do not provide a defined set of criteria for approval, and give the CSRC broad discretion to impose additional qualification requirements. The rules also stipulate that foreign firms must have at least RMB 300 million (US$36 million) to qualify as a joint venture partner, an amount significantly higher than in any other national jurisdiction. Given that asset management firms do not need capital reserves to protect investors, this requirement poses a market access barrier. CSRC does not appear to abide by its own regulations which require giving notice of the status of a joint venture application within 30 days. We also understand CSRC may be changing its regulations regarding joint venture establishment requirements, and would appreciate the opportunity to comment on those changes. CSI members urge China to go beyond its WTO commitments and allow a foreign firm to choose its form and equity participation levels and compete on the same basis as domestic firms. We also ask that China permit foreign firms to set up securities companies through vehicles of their choice, with power to engage in a full range of securities activities, including underwriting and secondary trading of government and corporate debt and A-shares. Foreign securities firms should be allowed to trade renminbi and renminbi-linked products with Chinese entities, as well as create and distribute derivatives. We are pleased that China took steps to open the A-share market to foreign investors by adopting rules on qualified foreign institutional investors (QFIIs). However, many institutional investors are unable to take advantage of the rules because the following aspects of the new rules limit their practicality: The rules restrict the percentage of an issuer’s securities that may be held by any single QFII and all QFIIs in the aggregate. The rules require each QFII to commit total investment of at least US$50 million to a special QFII account. Certain elements of the QFII licensing process lack transparency. For example, the licensing rules include a provision that allows the CSRC and SAFE to give priority consideration in granting licenses to “pension, insurance or mutual funds that have a good investment record in other markets.” Investment quotas must be fully funded within 3 months, and the unused portion of quotas will expire. This period should be increased to at least a year. The invested amount must remain in the QFII account for at least a year for open-end funds and three years for closed-end funds, and any remittances from the account must be approved in advance by the State Administration of Foreign Currency Control (SAFE).1 We understand that the CSRC is reviewing the lock up periods for investment for a possible change in the requirement. We would welcome such an amendment to the QFII rules, which would encourage further investment by QFIIs. Private Pension CSI Members welcome the Chinese government’s publication of key enterprise annuity regulations in May 2004. We believe tax favored, employer-sponsored supplementary private pension plans, managed by professional financial services firms - insurers, pension and retirement savings companies, banks, securities and mutual fund companies - is an important element to help China adequately address its growing aging challenges. However, we encourage Chinese authorities to make the following improvements: The Chinese government should flesh out the details of existing regulations, including information on licensing procedures and licensing authorities for private pension companies. It is essential to establish simple and transparent licensing procedures. Tax regulations should enable employers to make tax-deductible contributions to their employees’ pension plans. The rules should also enable tax deferral for individuals contributing to their defined contribution pension accounts, similar to the U.S. 401(k) plans. Chinese authorities should also ensure strict sectoral supervision and allow market driven fees on private pension businesses, without fee caps. Express Delivery Draft revisions to China's Postal Law violate its accession commitments in market access and national treatment. The draft raises the following key issues: Market Access for Foreign Providers. The draft legislation provides China Post with an absolute monopoly for all shipments weighing less than 350 grams. Regarding shipments over 350 grams, there is a provision prohibiting delivery of "addressed letters, printed matters and parcels" by foreign invested enterprises unless in the form of express delivery services. We believe that the enlarged scope of this monopoly is a flagrant violation of the horizontal rollback provision in China's WTO commitments. The draft also stipulates that when the State Council’s rules with respect to the international express industry contradict the legislation, the Council's rules will prevail. However, there are inconsistencies in those provisions, and we are concerned that the State Council can change its regulations at any time. Universal Service Charge on Express Industry Revenues. The draft legislation creates a new, unspecified charge on express industry revenues. The size of this fee and the basis on which it will be charged remain to be outlined in regulations. We understand that this fee is intended to support China Post's universal service obligation to deliver mail to remote regions. However, it is not the obligation of the express industry to fund China Post's responsibility to provide universal postal service, which is distinct from express delivery. Regulator's Independence. The draft legislation fails to provide for the establishment of an independent regulator. Having a postal agency as regulator puts US companies at a serious competitive disadvantage and raises significant market access concerns. Licensing Procedures. The draft legislation establishes a new, unworkable licensing regime with new authorities of supervision, inspection, and punishment granted to the postal regulator. Express delivery companies and their existing subsidiaries, that have already been issued licenses under existing regulations, as well as all future subsidiaries should not be required to re-apply and/or apply as appropriate for the licenses with the new regulatory authority. Freight Forwarding and Logistics Services MOFCOM revised the international freight forwarding (IFF) rules on December 11, 2002 to permit majority foreign ownership of IFF ventures. However, the revised rules do not provide a schedule for establishing wholly foreign-owned IFF enterprises. We would like to ensure that China will allow wholly foreign-owned freight forwarding subsidiaries according to its schedule of commitments, by December 2005, and that interested foreign companies will be able to provide their comments before such rules become law. CSI Members are also concerned about the continuing uncertainty regarding the specific procedures for wholly foreign-owned enterprises in land transportation to begin operation. On July 26, 2002 MOFTEC issued the “Notice on Relevant Issues Regarding the Experimental Establishment of Foreign-Invested Logistics Companies” which allowed foreign providers to conduct the full range of logistics services in eight provinces and cities. However, IFF companies are being permitted only to engage in local delivery within the city or province in which they are licensed to operate, but not between the specified areas. The licensing process in logistics and freight forwarding remains non-transparent, costly, and time consuming. Logistics companies applying to provide multi-modal services face the arduous task of acquiring and interpreting information about requirements that vary depending on the national authority and the province in which they file the application. Freight forwarding enterprises should be extended national treatment, and should be able to obtain a national operating license. CSI members also urge China to extend national treatment for equity capital to US providers of freight forwarding and logistics services. The minimum registered capital in freight forwarding equals US$1 million, plus US$120,000 for each additional branch, which is twice as high as the requirement for domestic companies. To provide third party logistics services, foreign companies must meet a US$5 million capital requirement. Telecommunications Despite China’s commitment to provide a reasonable period for public comment, changes to the 2003 Catalogue of Telecommunication Services were published by the Ministry of Information Industry (MII) only one week before their implementation. The very short period of one week between publication and implementation made meaningful comment impossible. The resultant telecommunications service classification regulations redefine basic and value added services so as to protect the state-owned incumbent providers. For example, they limit IP-virtual private networks (IP-VPNs) to “domestic” services, and delete “resale” services. A basic services license, available to foreign invested joint ventures only since December 2004, is subject to a RMB 2 billion (US$250 million) capitalization requirement, which is 100 times higher than for value added service licensees. We urge Chinese authorities to classify value-added and basic services in a manner that encourages competition and limits pre-qualification capitalization requirements to those directly related to specific risks of a new venture. A narrowly tailored performance bond would be more appropriate to address any reasonable risk concerns. CSI members believe that the MII cannot be considered as an independent telecom regulator because it continues to support state enterprises. The regulator has persisted in issuing rules distinctly favorable to state owned enterprises without inviting public comment, contrary to China’s obligations. We are pleased that China is currently circulating a long awaited telecom bill among its government offices. We hope this bill will address outstanding sectoral issues, and be available for public comment well before it comes into effect. Digital Products Customs Valuation China made WTO commitments with respect to customs valuation to apply digital products tariffs based on the value of the underlying carrier medium rather than on the imputed value of the content (i.e. on the basis of projected royalties). In June 2003, however, China issued regulations which do the exact opposite. Chinese authorities should reverse these regulations and ensure that customs valuation for all forms of digital products (including, software, movies and music) is based on the value of the underlying carrier medium. ***** We appreciate the continuing efforts by the USTR, the Department of Commerce, and other governmental agencies to obtain China's full implementation of its WTO accession obligations. We hope that this year the consultative process with the Chinese government can bring more progress in these and other sectors of interest to the US service industry. CSI Members believe that China’s full compliance with its accession commitments and further services trade liberalization will accelerate its development as a mature global trade leader, and help solve existing trade imbalances with the US. China’s initial services offer at the Doha Round and its intention to submit a revised offer are welcome steps towards this goal. CSI Members hope that China will join the US efforts to energize WTO services negotiations. China’s active and constructive participation in the Doha Round services negotiations is essential. The Doha Round presents a great opportunity for China to exercise its influence with developing countries by helping convince them of the benefits of adopting services trade and investment liberalization as China has. 1 The lock up rules pose regulatory compliance issues for mutual funds, which are required to meet redemptions at all times. As a result, most US mutual funds obtain exposure to China not under the QFII rules, but by investing in Chinese securities available in Hong Kong.