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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (2770)	3/11/2004 1:50:31 PM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

China's bank reforms to focus on stricter lending March 11, 2004 Beijing - China on Thursday said it plans to keep its currency "basically stable" as it pushes ahead with major banking reforms. Commercialization of state-run banks will include tighter supervision of lending, Liu Mingkang, chairman of the China Banking Regulatory Commission (CBRC), told reporters. Pilot reforms to the Bank of China and China Construction Bank, two of China's four main commercial banks, aim to reduce the banks' ratio of non-performing loans to 4 percent by 2007, Liu said. China's banks reduced their ratio of non-performing loans to 17.8 percent by the end of 2003, down more than 5 percentage points to 2.44 trillion yuan (about R1.986 trillion), CBRC said in a statement. Despite pressure to revalue its renminbi (RMB) currency, China plans to keep the exchange rate "basically stable at an adaptive and equilibrium level", the People's Bank of China, or central bank, said in separate statement. It plans to "steadily push ahead with RMB convertibility under the capital account, further develop the foreign exchange market and improve the mechanisms for determining the RMB exchange rate". Any change in bank interest rates would follow a rise China's consumer price index (CPI), People's Bank of China Governor Zhou Xiaochuan said. "The extent of (CPI) growth is not large enough for an adjustment," Zhou said. Officials would monitor the effects of earlier measures before deciding whether to raise interest rates, he said. Liu said private sector lending by China's main commercial banks rose about 50 percent last year, and the quality of the new loans was "quite high". The banking regulator said its main focus this year would be on changing Bank of China and China Construction Bank into joint stock banks. In January, China said it planned to use $45 billion to recapitalize the two banks and turn them into shareholder-run corporations. The banks will move towards purely commercial lending, and further away from their former roles in bailing out loss-making state enterprises. They will use standards which are "average among the world's 100 biggest banks", Liu said. The reforms will lead the drive to modernize state banks and prepare them for competition with foreign banks operating in China, without further help from the government. "I see no necessity for future cash injections for the two banks," Liu said in a joint press conference with Zhou at the ongoing annual session of the National People's Congress, China's nominal parliament. - Sapa-dpa businessreport.co.za