Financial Reform Still Crucial: Premier

Financial Reform Still Crucial: Premier

Continuing financial reform and effectively minimizing financial risks remain an important and urgent task in China, cautioned Premier Zhu Rongji on April 20. Speaking to leading officials of east China's Jiangsu Province during a recent study tour of the province, Zhu said that all banks and financial institutions must build a modern financial system, improve their management skills and enhance their capacity against dangers and risks.

The premier said that reform should be carried out particularly in state banks and should learn from overseas modern financial systems.

He warned non-financial institutions of engaging in financial activities and urged tough measures on those found dealing in illegal fund raising activities.

He also said that financial institutions should be able to manage their assets independently.

Zhu talked at length on the importance of maintaining stability in rural areas, urging local State grain firms to buy grain from farmers at protection prices.

Counter to government policy, many State grain firms have refused to buy grain from farmers at a time when supply exceeds demand. A survey shows that State grain firms have bought two- thirds of farmers' surplus grain. Jiangsu has done better, buying up 80 percent of farmers' surplus grain.

He said that governments at all levels should increase their fiscal subsidies in buying grain.

In addition, China will build granaries with a combined storing capacity of 10 billion kilos of grain this year and next, he said. China has built granaries with an aggregate storing capacity of 35 billion kilos of grain in the past two years.

"A prerequisite of opening up the grain purchase market is that State grain firms should always be ready to purchase grain from farmers no cheaper than the protection prices," he said. Zhu also urged alleviating taxes and charges on farmers, calling it not just an economic issue, but also a serious political matter.

He also requested township governments to reduce their staff and improve efficiency.