WASHINGTON - As lawmakers prepared to cast a controversial vote, financial services executives on Tuesday urged Congress to liberalize trade relations with China.
The House is scheduled to vote late this afternoon on the bill, which would provide financial companies - and their customers - greater access to one of the world's fast-growing economies.
Bank loans in China grew 16% last year, to $1 trillion, Edward L. Yingling, chief lobbyist for the American Bankers Association, told the House Commerce Committee's finance subcommittee. "The opening of China's markets to financial firms presents tremendous opportunities for U.S. banks and financial firms and will add to U.S. economic growth," he said.
"Bank of America, KeyCorp, Wachovia, Wells Fargo, and others finance American-based companies whose economics are greatly enhanced by increased trade with China," Financial Services Roundtable president Steve Bartlett said in an interview. "Our good health is directly tied to the good health of the economy."
Supporters are predicting a narrow victory. President Clinton - who has personally been lobbying reluctant Democrats - and Republican leaders were between eight and 10 votes shy of the 218 needed for passage as of midday Tuesday, according to an Associated Press report.
Today's scheduled House vote is the key hurdle, lobbyists said, because Senate approval is expected. A spokesman for Senate Majority Leader Trent Lott, R-Miss., said the Senate plans to vote on the legislation after its one-week Memorial Day vacation.
Under the trade agreement, foreign banks would face fewer hurdles in obtaining licenses, and foreign investors would not be forced to form joint ventures with Chinese entities to offer banking products. Geographic restrictions on foreign operations would be phased out over five years, and branching restrictions on foreign financial firms would be significantly eased.
"Within five years, this agreement will give U.S. financial services firms seeking to operate in China all the same powers enjoyed today by Chinese banks," a coalition of 18 financial firms and trade groups wrote in a letter to all 435 House members. Signers included Citigroup Inc., Chase Manhattan Corp., Aegon Insurance Group, the Securities Industry Association, the ABA, and the Roundtable.
China also would let foreign banks handle transactions in local currency for Chinese businesses within two years, and for Chinese consumers within five years. Currently, only nine foreign banks - including two from the United States, Citibank and Bank of America - may conduct business in local currency, and only to foreign clients in the Shanghai area.
Passage would help small banks, too, because farmers are among their top customers. Under the trade deal, Chinese tariffs on agricultural imports are expected to plummet 50% or more over five years, and U.S. agricultural exports are expected to rise by $2 billion per year by 2005.
"We have bankers in this week who are lobbying on both sides of the Hill today" for the bill, said John H. Hanley, a lobbyist for the Independent Community Bankers of America. "We obviously have a significant portion of our membership who serve rural and agricultural communities. There is a direct linkage between these operations and trade with China."
Big-business lobbyists have poured millions into lobbying for the bill. Members of the Business Roundtable, which represents various industries, made nearly $4.2 million in soft money contributions to political parties in March - nearly double the amount in February, according to the Center for Responsive Politics. Citigroup contributed $231,000 of that, including a $100,000 contribution to the Democratic Congressional Campaign Committee - the fundraising arm of the House Democrats.