China values others' experiences in financial reform

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Last updated at: (Beijing Time) Saturday, March 20, 2004

China values others' experiences in financial reform

China hopes to learn from international experience in reforming its state-owned commercial banks, Chinese Vice-Premier Huang Ju said Saturday in Beijing.

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China hopes to learn from international experience in reforming its state-owned commercial banks, Chinese Vice-Premier Huang Ju said Saturday in Beijing.

Also a member of the Standing Committee of the Political Bureau of the Central Committee of the Communist Party of China, Huang told Sir John Bond, chairman of the Hong Kong & Shanghai Banking Corporation Ltd. (HSBC) Group, that the reform in the banking sector is an important component of China's economic reform.

"An important part of China's economic reform is to accelerate the financial reform to realize a healthy development of the financial sector," Huang said.

China has launched the reform on two of its wholly state-owned commercial banks by introducing a joint-stock system. They are the Bank of China and the China Construction Bank.

The Chinese government gave each of the two banks 22.5 billion US dollars late last year from its foreign exchange reserves to boost their balance sheets in preparation for stock market listing,ordering them to clean up their tattered loan books and improve lending practices to become internationally competitive banking firms.

The two banks, which are preparing for overseas listing, were ordered to have all necessary elements of a standard joint-stock bank, for example, the general meeting of shareholders, board of directors and board of supervisors.

China has promised to open its banking business -- in all places and all currencies -- to foreign banks in 2006. However, China's major banks are still beleaguered by lack of corporate governance, high non-performing loan ratios and low capital adequacy ratio.

Huang said the objective of China's banking reform is to transform the wholly state-owned commercial banks into modern joint-stock commercial banks through improving corporate governance, transforming operation mechanism and strengthening exterior supervision.

"China hopes to learn from the success of world experiences in this regard," the Chinese vice-premier said.

In addition, Huang said China welcomes the HSBC and other financial institutions to come to China for investment and cooperation. It also encourages and supports their lawful operation in China.

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