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Technology Stocks : C-Cube -- Ignore unavailable to you. Want to Upgrade?

To: John Rieman who wrote (28152)	1/17/1998 11:53:00 AM
From: CPAMarty	Read Replies (1) \| Respond to of 50808

China: Planning to make its banks 'commercial' ft.com SATURDAY JANUARY 17 1998 ------------------------------------------------------------------------ By Tony Walker in Beijing ------------------------------------------------------------------------ China yesterday unveiled sweeping reforms of its debt-burdened banking sector aimed at "commercialising" banks by 2000 and avoiding a south-east Asian-style financial crisis. Beijing also indicated it would ease credit selectively for housing, infrastructure, agriculture and small businesses to stimulate an economy which is slowing. Mr Dai Xianglong, central bank governor, said the authorities were committed to bringing Chinese banks into line with international practice by imposing Bank for International Settlements standards on management of loans. Mr Dai said China would accelerate write-offs of bad debts to banks to clean up balance sheets as part of efforts to build a "modern financial system". Lax controls on lending to state-owned enterprises have left the "big four" state-owned commercial banks with a mountain of bad debt which is one of the main barriers to reform of the financial sector. Mr Dai made it clear that a national conference held last month on financial sector reform had provided a springboard for a more concerted effort to modernise an antiquated financial system which is proving a drag on economic development. He said priorities included the establishment of commercial banks in 300 cities to provide financing for local business which was starved of funds. Unwieldy state-owned banks would be required to close money-losing smaller branches. The central bank itself would be subjected to reform with the elimination of provincial-level branches and the establishment of regional offices similar to the US Federal Reserve. Mr Dai also: Ruled out a devaluation of the yuan. China's economy was strong with a healthy balance of payments and exports would remain competitive. Defended the Hong Kong dollar "peg". The Hong Kong dollar was "healthy" and foreign reserves were sufficient to defend it. Said China had no plans for another interest rate cut. Rates have been cut three times since May 1996. Made it clear south-east Asia's financial crisis would slow progress towards full convertibility of the yuan. Mr Dai pledged an "appropriately tight" monetary policy for 1998, but he also indicated that credit ceilings would be lifted to encourage greater lending to key areas such as agriculture. He also revealed plans to develop mortgage lending to "foster a housing market". "Mortgage business will be expanded to cater to the needs of more customers and credit ceilings imposed on lower-cost housing will be removed," he said. However, greater efforts would be made to restrict loans to "luxury real estate projects" to prevent "bubble elements" in the economy. A programme for a mortgage finance system for medium and lower-cost housing is a long overdue reform and one which is designed to stimulate economic activity generally.