Shanghai, China's second city, is awash in the largess of American insurance companies.

Visitors to the new library can use the New York Life Insurance Co. audio-visual room. The Shanghai Museum's "Hall of Coins" was funded by an $850,000 grant from a foundation created by American International Group (AIG) Inc. The Chubb Corp. spent $3 million on a Chubb school of insurance, and the new Aetna School of Management is under construction at Jiaotong University, alma mater of China's President Jiang Zemin.

All this, and more, is a consequence of American firms' efforts to win permission to sell insurance in China. For years, foreign companies have courted the Chinese government with money and favors, because until now, the government decided arbitrarily who could enter its market. New York Life hasn't yet received a license; Aetna, AIG and Chubb have.

But under the terms negotiated last week for China's entry into the World Trade Organization (WTO), this whole game should end. In talks with U.S. trade officials, China agreed to allow any foreign company that meets basic "prudential" standards--and, in some cases, agrees to work with a Chinese partner--to sell insurance in China. This would be, insurance executives say, a revolutionary change in the way foreigners do business in China, and in the way China does business.

Though supporters of Chinese membership in the WTO most often tout the potential benefits for American farmers and manufacturers, many of the big winners will be in the service sector, including banks, securities houses and telecommunications companies. The insurance industry's experience, in particular, shows how tantalizing the Chinese market can be.

"When the actuaries think about 1.2 billion lives, their mouths water," said MetLife's chairman emeritus, Harry Kamen, who has the job of getting his company into China. "It's not only the number of people that are there, but there's very little life insurance being purchased relative to the rest of the world." The Chinese savings rate--40 percent of earnings--also makes a powerful impression on insurance salesmen.

Those opportunities have led American insurance companies to pay huge fees to former president George Bush--who received $250,000 from Chubb alone--and to other ex-government officials to help their cause in Beijing. Insurers also have organized lavish entertainment in this country and China for Chinese officials, and have paid for trips, seminars and other events for the Chinese. (An aide to Bush said this week the former president received a "speaking fee" but was not paid to lobby Chinese officials. Chubb and John Hancock, who retained Bush and whose executives accompanied him to China, got licenses from China at the time of Jiang's 1998 visit to the United States.)

Overall, the campaign to woo China has cost about 90 multinational insurance companies a total of as much as $300 million a year, according to one Beijing-based insurance executive, even though the rewards so far have been paltry: nine licenses for insurance businesses, largely limited to two cities, Shanghai and Guangzhou.

The WTO accord reached this month would radically alter the playing field. Geographic restrictions would vanish. Foreigners would be able to buy 50 percent of joint ventures and gain management control over them. Foreign property and casualty insurance firms could have wholly owned subsidiaries.

"I think this is probably the most important economic development for China in the last 50 years," said Sy Sternberg, chairman of New York Life.

Insurance companies have been in the forefront of American business efforts to get China into the WTO. Now American insurance executives will be at the forefront of efforts to persuade Congress to grant permanent "normal trading relations" status to China, a prerequisite for American companies to enjoy the market access and other benefits of China's entry to the WTO.

Sternberg said he has met with a dozen House members and two senators in the past two weeks. Sandra Kristoff, New York Life's Washington-based executive vice president who formerly worked as senior director for Asian affairs at the National Security Council, has seen nearly 100 members of Congress since April. Both Sternberg and Kristoff have been plying their views in congressional testimony and op-ed articles in major newspapers.

The dean of the American insurance community in China--and the executive most effective at wielding influence on both sides of the Pacific--is Maurice "Hank" Greenberg, the AIG chairman and former head of the U.S.-China Business Council. As the WTO deal was wrapped up last week, the 73-year-old executive was waiting in his 18th-floor office in lower Manhattan for U.S. Trade Representative Charlene Barshefsky to call from Hong Kong with the details.

"I've been going [to China] since 1975," Greenberg said in an interview. "I've seen the miraculous changes that have taken place."

AIG was founded by an American businessman in Shanghai in 1919 but moved its headquarters to New York after the Communists took power in 1949. AIG always wanted to return to China, and in 1974, Greenberg asked if he could visit, or be visited by, the president of the People's Insurance Co. in Beijing. A year later he was invited to China.

AIG and the People's Insurance Co. created a trade and marine insurance joint venture in 1979. In the mid-1980s, Greenberg started lobbying Zhu Rongji, then Shanghai's mayor and now premier. He became head of an international group of business advisers to Zhu. He talked to all the members of China's State Council.

In a shrewd appeal to Chinese sentiment, Greenberg also recovered some brass windows stolen from the old Chinese imperial summer palace, which foreign troops burned to the ground after the Boxer Rebellion a century ago. He bought them for $515,000 from a French collector and donated them to the Chinese government. In return for the brass windows, China opened the door for AIG to part of the Middle Kingdom.

In 1992, AIG was granted permission to sell life insurance in Shanghai and Guangzhou, the first licenses given to foreigners since the Communist takeover and still the only licenses allowing a foreign company to operate without a local partner. How did that happen? "[Former premier] Li Peng, Zhu Rongji and Jiang Zemin had a lot to do with it," Greenberg replied.

According to a report by China International Capital Corp., AIG quickly "nearly monopolized" the Shanghai life insurance market, winning a 91 percent market share.

Greenberg's competitors call him "the visionary" and freely acknowledge that AIG has a huge head start in China. (Investors seem to agree; its stock shot to record heights after the WTO deal was announced.) But others are working hard to catch up with AIG.

When Zhu visited the United States in April, New York Life had an executive at almost every stop. Sternberg sat at the head table at the State Department luncheon and the New York luncheon and dinner. He also showed up at the state dinner (along with Greenberg and Aetna Life & Casualty Co. chief executive Richard Huber) at the White House. His top executive for international business, Gary G. Benanev, sat at the head table at the luncheon for Zhu in Chicago. Afterward, Sternberg made two visits to China and saw Zhu again.

Some companies bring Chinese officials here. MetLife hosted the vice chairman of the China Insurance Regulatory Commission last week and presented him with translations of New York state insurance laws. It also has set up a $100 million investment fund.

Zhu Rongji and his reformist allies in China apparently believe foreign insurance companies can help modernize the country. China's stock markets are small and unstable, while the state-run banks, where most Chinese households put their money, mostly funnel money to big, money-losing state-owned enterprises. Ideally, foreign-run insurance companies can attract money from Chinese households and look for profitable, long-term investments.

"We feel very strongly that one of the functions that particularly the life insurance industry fulfills in going into emerging markets is that we are very strong catalysts for the formation of a true capital market," said Huber.

Earlier this month, China relaxed rules that had limited insurance companies to investments in government bonds or bank accounts. Now insurance companies will be able to invest in some equities and corporate bonds.

Foreign competition also could sharpen the performance of China's homegrown insurance companies. A report by China International Capital Corp. said that after AIG captured the lion's share of the Shanghai life insurance market, Chinese insurers improved. They regained a majority of the market in 1996 and 1997. Improved marketing techniques by all insurers sparked a 100 percent increase in total life insurance premium revenue in 1996 and a 60 percent rise in 1997.

Not every Chinese leader has quickly grasped the benefits of foreign insurance companies. When President Jiang visited the United States in late 1997, he remarked to Aetna's chief executive, Huber, that he really didn't understand how life insurance worked. "We collect money from the poor and give it to the rich," Huber said, to the horror of a nearby Clinton administration official. Huber then explained that insurance companies collect from working people and give money to entrepreneurs who are investing and building for the future.

Jiang laughed heartily. "Now I get it," he said.

Correspondent John Pomfret contributed to this report from Beijing.