Central Bank Governor Dai on Financial Advances Made

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Last updated at: (Beijing Time) Tuesday, September 17, 2002

Central Bank Governor Dai on Financial Advances Made

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Governor Dai Xianglong of the People's Bank of China on September 16 made a report on China's new financial advances made at the conference looking into great achievements of China's modernization construction since institutional reform of the country's finance and the 4th Plenum of the 13th CPC Central Committee.

Dai dwelt in detail on China's great achievements made in China's finance industry during reform:

-- Gradual perfection of the financial system has greatly boosted a sound development of the Chinese economy. State-owned commercial banks are being reformed into modern financial enterprises. China has set up 120 small and middle-sized share-holding banks.

China has further regulated and developed its securities and insurance institutions and "go-ahead" has been given some foreign banks launching businesses in China.

So far, China has basically set up a well-founded financial system with various banks, securities and insurance firms constituting the core. By the end of June, this year, China's total assets by financial institutions reached 2.44 billion yuan.

From 1990-2001, various loans accumulated to 1.2 billion yuan, a yearly increase of 19.2%.

-- Financial market tends to be more mature, social funds allocation and utilization have been further enhanced. Monetary market has reached a certain scale. In 1994, China had inter-bank loans market launched, and an inter-bank securities market in 1997.

By the end of June this year, inter-bank loan, inter-bank foreign currency transactions reached dlrs 480 billion.

Capital market has witnessed a sound development, by the end of this August, China's listed companies reached 1197 with total assets topping 465 million yuan.

Insurance market has been greatly expanded. In 2001, insurance premier in the country totaled 210.94 billion yuan, a yearly increase of 25.2%.

-- Macro economic control markedly raised, RMB value is stable. The central bank loosens control on loan volume, it employs interest rates and other monetary policies to control currency supply volume, the central bank also achieved direct control on economy to indirect control.

From late 1993 to 1996, China implemented a moderate monetary policy, hence an effective curb on inflation. Since 1997, China stressed on expanding domestic demands in line with a sound stable monetary policy. Meanwhile, it intensified efforts backing up economic development to stave off financial crisis, making sure RMB stay stable.

-- Supervision over financial institutions has been greatly strengthened. Related laws have been enacted. Since 1993, the Central Government launched a fight against illegal dealings in financial industry.

Four state-owned commercial banks have adjusted their bad assets. Some banks and banking institutions got punishment for failing to pay back debts in the way with financial activities put in order depositors' interests were protected, financial and social stability kept.

-- China continues to open up its financial industry to foreign nationals. So far, China now registers 205 foreign-funded financial institutions, with total assets reaching dlrs 38 billion. In the meantime, China's financial firms also explore ways to launch more business operations in foreign countries.

Foreign currency management has been greatly improved. Since 1994, China set up a float interest rate system, and in December 1996, China realized RMB exchange in current items.

China has succeeded in striking international payment balance, RMB continues to keep up a stable exchange rate, foreign currency reserve increases, RMB has come to enjoy a raised international status. By the end of August, China's foreign currency reserve reached dlrs 253 billion, a 45-fold increase over 1989's dlrs 5.55 billion.

China's position in International Monetary Fund has moved up to the 8th place from the 11th. It has taken a active part in ASEAN bilateral monetary exchange and other financial cooperative activities, especially during the Asian financial crisis, China had not only kept RMB stable, but had also provided aid for crisis-hit countries, claiming a very big role in stabilizing Asian financial market.

-- China also made great progress in electric financial construction and financial innovation, financial services have been greatly enhanced by various banking institutions. Under the care and encouragement of President Jiang Zemin, in 1994, China began to start on a "golden card project" for an online payment system in China

So far, a large array of 438 million banking cards have been issued, and 43000 ATMs and 269000 POSes are available across the country. By the end of 2002, 300 cities will be categorically linked on a city scale and of these 100 will plan to offer a range of categorical card service on an inter-city inter-bank scale. Visa cards will be used in some 40 cities to convenience an ever enlarged number of customers in China.

By PD Online Staff Li Yan

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