The Chinese Academy of Social Sciences published its financial bluebook titled the Report on the Development of China Finance for 2005 today in Beijing. Governor of the People's Bank of China Zhou Xiaochuan, together with the top officials with China Development Bank and CASS, was present at the meeting and gave keynote speeches.

The report comprises of three sections with focuses on the national economic operation, financial view and insights into specific fields (financial reform and development, monetary policy, financial market, the real estate market, financial supervision, insurance).

The report does not think the allegation of inflation driven by salary and price hikes well-reasoned, although the prices of crude oil, energy and rolled steel are rising on the international market and shortage of peasant workers, followed by better paid job offers to peasant workers, once embarrassed manufacturers in Pearl River Delta and Yangtze River Delta since 2004.

As to the banking sector, the report has pinpointed capital adequacy as the major stumbling stone on the way of the development. It says that China's banking sector needs more than 200 billion yuan of additional capital per year to meet the at least 8 percent capital adequacy requirement for commercial banks. However, there are problems in any of the three main capital fund sources to achieve this: profit retention, financing through the capital market, and private placement.

The report also depicts a rosy picture for China's insurance business. It highlights the country's stable political and economic environment, its world's largest population with the most massive urban groups accumulating wealth the fastest, and its aging society.

By People's Daily Online