The actions taken by the Chinese government to rein in loans for overheated sectors are understandable, and will not have major influence on the business of foreign banks in China, said Andrew Wong, head of China business of Hang Seng Bank Ltd. in Hong Kong Monday.

As China is a developing country, the actions to do some adjustment to the economy is understandable, said Wong, who was attending a luncheon held by the Hong Kong General Chamber of Commerce.

China Banking Regulatory Commission recently ordered commercial banks to pull back on loans extending to rush investment and copy-cat construction in an effort to guard against new problem debts and inflation.

A circular issued by the commission said that banks should make responses to the country's macro-economic adjustments by rationally controlling the amount of loans for overheated sectors including iron and steel, aluminum, cement, real estate and automobile.

Wong said that some consolidation is necessary, because there are too many companies concentrated in a few industries in China.

But the actions will not have great impact on foreign banks' business because most of the customers of foreign banks in China are foreign-based companies who have solid strength, said Wong.

If the company is strong enough, it can still get support from local banks and survive, he said.

Hang Seng Bank will adhere to its principle of prudence, and will be very careful in the process of examining and approving loans in the overheated sectors, said Wong.

Source: Xinhua