China will press ahead with its opening-up and relax
restrictions on foreign investors in the financial services sector,
the People's Bank of China said Monday.
It "will, in a modest manner, allow foreign investors to take
more stakes in the financial services sector and relax the
restrictions on their business scope and origin," the central bank
said in its second China Financial Stability Report. But
it did not elaborate in the report.
The report comes only a month away from the country fully
opening the banking sector in line with its World Trade
Organization commitment.
It would also "determinedly push forward the reform of
State-owned commercial banks to improve their ownership structure,
corporate governance and internal control mechanisms, provided that
the State remains (their) absolute majority shareholder," the
central bank said.
It also vowed yesterday to beef up its control on major
financial institutions to safeguard national financial
security.
According to the report, China has made breakthroughs in
financial reform and dealt well with financial risks, with the
overall financial system stable last year.
"The rapid yet stable national economy has laid a sound
foundation for achieving financial stability," the central bank
said.
But it warned that international imbalances and swings in oil
and other resource prices may impact the country's financial
stability.
And the intensifying competition and potential risks that may
arise from financial innovation may also pose risks to China's
financial stability, the central bank added.
Direct financing is still developing at a sluggish pace in the
country as enterprises rely heavily on bank loans. This "is
concentrating on banks some of the risks that should have been
shouldered by financial markets," the central bank said.
This financial structure is detrimental to the operations of
banks and to the prevention of systematic financial risks, it said.
The central bank also said yesterday it would accelerate the
establishment of a deposit insurance mechanism.
(China Daily October 31, 2006)