Ensure Chinese economy "circulates smoothly" (2)

"The path of financial reform is still long and the financial industry should never become complacent."

60 years is only a short moment in civilization, but China's financial industry has achieved exponential growth during this period.

Prior to reform and opening-up, China's total financial assets stood at just 300 billion yuan, but in ensuing 30 years this has increased to 86.5 trillion yuan, an increase of 53 times over that of 1989, 20 years ago.

"The fundamental reason for this tremendous change is the policy of reform and opening-up," said Zhou, who personally participated in the shareholding system reform of state-owned banks and the Renminbi (RMB) exchange rate reform.

"In 2002, China's financial industry was criticized by foreign media agencies. Some said that China's financial system was a time bomb and some noted that the system was technically bankrupt. At that time, the non-performing loan rate of China's banking industry was as high as 25 percent, or perhaps even higher due to varying statistics standards," Zhou recalled.

Reform is imminent. In the wake of the Asian Financial Crisis, the CPC Central Committee and the State Council resolutely decided to initiate a shareholding system reform of state-owned banks. In January 2004, the State Council announced its decision to launch a shareholding system pilot reform for the Bank of China (BOC) and China Construction Bank (CCB). The shareholding system reform, which was described as "the last stand" by Premier Wen Jiabao, officially started.

"The reform improved the governance structure of state-owned banks and significantly enhanced their strengths and risk resistance capacity, which helped them withstand the test of the Asian financial crisis," Zhou said, "It is like a 'cushion' constructed before the crisis. If a car is equipped with a good buffer device, passengers will not be thrown out even if it encounters big bumps on the road."

At present, the Industrial and Commercial Bank of China (ICBC), CCB and BOC have become the world's largest three banks in terms of market value. Zhou has a sober attitude towards this achievement. He said, "There are various standards for the ranking of banks, including market value, turnover, total assets and core capital, and market value is always changing. I mean the path of China's financial reform is still long. The Chinese financial industry should particularly emphasize keeping pace with the times and risk awareness. The industry should never become complacent."

Zhou has been affectionately called "Mr. RMB" by the media due to his role in promoting the reform of the RMB exchange rate forming mechanism.
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