Xinhua - English

Xinhua - English
Official: Chinese banks not fully prepared for vying with foreign banks

www.chinaview.cn 2005-04-26 16:34:53


BEIJING, April 26 (Xinhuanet) -- Chinese banks are not fully braced to compete with foreign-funded banks, said Shi Jiliang, vice president of the China Banking Regulatory Commission, the country's banking watchdog, here Tuesday at a high-level forum on China's financial reform.

"As the interim period after China's entry into the World Trade Organization (WTO) comes to an end, China's banking sector will soon enter a fully opening-up era, with foreign-funded banks enjoying national treatment," he said.

"The competitiveness of Chinese-funded banks has yet to be improved," he said.

"Renminbi service will be the focus of competition between Chinese and foreign banks," he acknowledged. "The rapid growth of foreign-funded banks' Renminbi business is beyond expectation," hesaid.

Foreign-funded banks will be less dependent on Chinese banks' Renminbi fund as they increase their own Renminbi deposit, Shi said.

Although Chinese banks have sped up internal reforms, they still "do not meet the criteria for the governance of modern financial companies," he said. Chinese banks, weak in management and risk control, are facing tough tests in Renminbi services, a traditional advantageous area for Chinese banks, he said.

Shi suggested that Chinese banks carefully study WTO rules and learn from other WTO members to safeguard the security of China's banking industry. Enditem

BoC risk

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中行痛定思痛　四分行再查危情

21世纪经济报道 　2005-04-20 16:26:48




　　
　　本报记者　韩瑞芸　北京报道
　　
　　“没有人比我们更感受着切肤之痛。”4月18日，中国银行第一季度经营业绩新闻发布会上，新闻发言人王兆文一谈起金融案件便微微叹气，“这些案件，对于中国银行的影响是恶劣的，对中国银行造成的伤害也是巨大的。”
　　此时，东北“高山案”尚未侦破，北京“森豪公寓”按揭涉嫌骗贷案仍在审理，而自今年2月起，在中国银行内，一场针对所有分支机构的“拉网式”自查早已拉开帏幕，更多的案件逐一浮出水面。
　　“在各省分行的检查过程中，有四个省发现案件。有的案件比较小，有的不算小；有牵涉上百万资金的，也有几十万的。我们将对这些案件进行梳理，并及时披露。”王兆文说。
　　中行称，这场业务大检查覆盖了该行内部所有的经营性分支机构(截至2003年末，中国银行共有全球机构12158个)。其中，贪污、挪用、贿赂、诈骗、违规经营案件以及经营管理人员以权谋私、腐化堕落案件，是案件查处的重点。
　　检查共分为三个阶段。第一阶段，由各一级分行组织开展业务大检查，重点检查管理制度与业务流程，清理各项规章制度；第二阶段，根据业务增长率、风险集中度、信贷风险、内部审计发现问题等指标，确定重点检查对象；第三阶段，由总行成立20个抽查小组，对全辖重点分支机构进行抽查，抽查比例为10％。
　　“现在，检查工作已经基本上告一段落。我们正对查出来的问题进行梳理，以便于接下来整改。”中行三位新闻发言人之一的周凝说，“我们下半年的工作重点是两个‘抓’：抓基层和抓基础，要从体制、机制、内控的技术手段和业务流程等各方面解决(案件高发的问题)。”
　　与此相应，中行出台了一系列整改措施。
　　譬如，在管理层成立内部控制委员会及内控专家小组，进一步完善内控风险制度。委员会由行长李礼辉任主席，负责全行审批政策制度、审议工作报告、处理内部控制缺失引发的重大事件等。
　　一个由内部业务专家及外部审计专家组成的专家小组也已组建。据王兆文介绍，该小组的主要工作内容是对业务流程、考评体系，以及整个操作规则进行评价，并着手制定工作制度、议事规则。专家小组检查方式为现场与非现场的结合。目前，小组工作仍在进行当中。
　　为防范操作风险，该行制定下发了《中国银行操作风险管理指引》、《中国银行内部控制指导》、《关于商业票据转贴现业务有关问题的通知》等业务指导文件，明确授信、资金、存款及柜台、信用卡、结算等业务流程控制的重点及风险点，指导全辖严控各个环节、部位的操作风险。
　　此外，中国银行总行还新设了七八个巡视组，在各个地区各个分行进行不间断检查和巡视，并直接向总行汇报结果。对于已发案件，中行也在加紧处理，如对“高山案”所有13名涉案的内部人员进行责任认定，或开除，或免职。黑龙江省分行对辖区内分支机构均进行了相关检查，制定一系列有关风险防范的制度，并特别强调管理人员轮岗制度。
　　“我们在全行开展了贯彻从严治行的大讨论，让24万员工都参与进来。我们的内部报纸也已经连续发表了六篇社论。从严治行的方针到底为什么贯彻不下去？为什么基层网点的案件会增多？”王兆文认为，内控机制的缺陷是案件高发的主要原因。而中国银行的内控理念尚有差距，内控的组织还不够强，内控的措施还不够细，内控的手段还不够全。
　　不过，王兆文并不认为，这些金融案件的发生将阻碍中行引进战略投资者的进程。“在与战略投资者谈判时，这些案件会带来一些麻烦。但丑媳妇总是要见公婆的。我们长得就这个样，也不能掩饰自己的缺陷。”
　　实际上，总体而言，这些案件并未拖住中行的发展的步伐：今年一季度，该行实现税前利润191.82亿元，同比增加50.57亿元，增幅达45.80％。截至今年3月末，全行本外币授信不良率为4.67％，较年初下降0.42个百分点。
　　王兆文强调：“所有战略投资者，他们关注的倒并不是案件的多少，他更关心银行的机制。所有的银行，不论是大银行还是小银行，国外银行还是国内银行，都会有案件。如果银行的机制是好的，案件的发生就可能是偶然的。”

ABC risk

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农行8万人"自救行动":杨明生誓言决不护短

21世纪经济报道 　2005-04-20 16:26:47


中青在线



　　
　　“四大行风险自查”系列报道
　　相关报道见第18版《银监会三颁铁令招行马蔚华遍发“责任状”》
　　
　　本报记者　孙铭　北京报道
　　
　　4月16日，农业银行经营机构操作风险专项大检查全面展开。8万多检查人员正式进驻25000多个营业机构，对每个操作环节进行内部自查。
　　“这是农行有史以来组织的规模最大、涉及面最广、复杂程度最高的一次专项检查。”农行行长杨明生在动员会上指出。
　　
　　农行大检查开锣
　　按照农行的部署，这次专项大检查由总行统一组织，以省分行为单位组织二级分行进行交叉检查，要求直接检查到营业网点。
　　“我们吉林省农行抽调了1500多人，专门成立了9个检查组，各检查组已经在16日全部进入被检查单位。”农行吉林分行的人士称。
　　吉林农行成立的检查组全部由二级分行行长任组长，对各分行进行交叉检查。每个检查组又下设领队及若干个检查小组，每个小组指定一名负责人，检查小组按照业务量大小由3到5人组成。检查组统一命名为“农行吉林分行经营机构操作风险专项大检查第××检查组××检查小组”。为了将这次检查做实，吉林农行还在4月10日到12日，对二级分行行长、会计部门经理、审计中心主任、省行专职督察人员及会计、信贷、国际业务骨干人员进行培训，并与二级分行签订检查责任书。
　　在四川，纳入检查范围的网点达到1320个。农行选调了1500人参加检查，从省分行到二级分行、县支行都成立了专项大检查领导小组和检查工作办公室。湖北分行成立了13个检查工作督导小组，并规定了更为严格的“五个一”制度，即“不漏一个机构，不漏一个柜员，不漏一笔业务，不留一笔隐患，不隐瞒一个问题”，做到一查到底。
　　为此次大检查，农行酝酿已久。
　　从3月底接到国务院领导对商业银行案件的有关批示，以及后来银监会下发《关于加大防范操作风险工作力度的通知》，农行就开始为大检查做准备。按照计划，这次大检查共分为5个阶段进行：准备阶段、动员和部署阶段、培训阶段、检查阶段和总结－整改阶段。
　　4月4日，农行行长杨明生专门召开动员和部署大会。杨称，“这次大检查是完善农业银行制度管理体系，从源头上预防风险的迫切需要。”他要求各分行行长作为本次检查的第一责任人，亲自组织并督促有关机构和人员的落实。各分行要抽调精干人员组织检查，在抽调人员时，须合理搭配会计、信贷、审计、监察、保卫、国际业务等各类专业人员。
　　参照银监会要求以及农行的实际情况，农行主要针对11个方面的内容，分别是：重点环节控制制度落实情况，对账制度落实情况，单位银行结算账户开销户管理，公司类大额存款业务管理，印、押(机)、证分离管理，大额个人信贷及票据贴现业务管理，联行业务管理，票据业务管理，库房及重要空白凭证管理，国际业务管理，人员行为排查。
　　据农行浙江分行一位管理人员介绍，检查所涉及的账目主要是去年第四季度以来所发生的。比如11项检查内容中的对账制度落实情况、公司类大额存款业务管理等项目，如果自去年第四季度以来的情况没有问题，那么就基本可以判断这些业务的操作是合规的。
　　按照计划，大检查将于4月30前结束，5月份进入“总结－整改”阶段。
　　
　　彻查与严责并重
　　国有商业银行频爆大案，有关部门已经意识到操作风险正成为银行改革的又一个难点。银监会日前通报的农行“内蒙古案件”，更让后者认识到这个问题的严重性。其实早在年初的全国分行行长会议上，农行就提出了“由以前单纯的信贷风险管理模式转向信用风险、市场风险、操作风险并举”。这次由银监会推动的大检查，与农行此前的工作不谋而合。
　　风险意识的加强已然见效。一个小例证是，2月22日上午11点半左右，一名年轻女子持农行信用卡到农行河北分行营业部冀兴支行要求提取5万元现金。当班女柜员接过卡迅速为其办理业务，当准备将款项如数递出窗口的一刹那，该柜员发现邻柜终端上刚刚发布的一个通知：“因案件，如网点发现卡号为x的发生存取款行为，先将该人稳住，立即拨打110报警，并同时通知保卫部。”出于职业敏感，她对了一下卡号，正是这张卡，随即她要求该取款人重新出示身份证，并用暗语报警。在取款人逃跑时，两名柜员迅速将其擒获。事后发现取款人的身份证是伪造的，并且顺藤摸瓜，成功侦破了一起绑架案。
　　控制风险“源头”的同时，对违规人员的处罚亦相当严厉。日前，农行大连分行公开通报处理了7起典型案例，这些通报的典型案例涉及违法挪用银行和客户资金、违规处置抵债资产和抵押物、违规放贷和管贷不严、违规调款和虚增存款等问题。农行对76名相关责任人进行了公开处理，其中开除5人、开除留用察看1人、撤职2人、记大过6人、记过10人、警告46人、通报批评6人。
　　杨明生坦言，农行案件形势异常严峻，开年以来，百万元以上的经济大案和刑事案件接连发生，与操作风险控制防范不力有直接关系。杨希望大检查能够消除隐患，降低案发率。“(对责任人要)毫不留情地处理，决不姑息护短。”他说。
　　而为了保证检查的深入，在动员会之后，一个大检查骨干培训班也在农行武汉培训学院开课。参加此次培训的人员包括总行大检查督导组相关人员，以及分行财会、监督和信贷、国际等有关部门的处长。培训的主要内容为农行大检查的11项内容。
　　农行副行长、纪委书记韩仲琦在培训班上直言，这次培训专门为操作风险大检查做准备，要求立竿见影，培训完毕后立即付诸实践。由于时间紧迫，内容繁多，农行完全采取了灌输式的培训方法。
　　韩仲琦说，要通过大检查，把已经发生的案件消灭在初期状态，将可能发生的案件消灭在萌芽状态，各行必须对检查出来的案件有预案准备；全面揭示问题，把经营机构存在的问题清晰化、明细化；对农行整个内控管理制度作出切实评价。
　　
　　·链接·
　　工商银行在3－5月部署开展以合法合规为主要内容的业务大检查，目前已抽调近6300人，组成490多个检查组，对涉及基层负责人和重要岗位人员的管理、会计结算业务、个人金融业务、电子银行业务等35个方面、258项内容进行全面检查。
　　农业银行在2－5月开展全系统的风险专项大检查，出动8万人次，对2.5万个经营机构进行检查，涉及会计、结算、信贷等11个方面的内容；出台了违法违规行为“四个一律开除”和“举报违法违纪违规行为奖励办法”；开发“新一代”预警监督系统，全面监控操作风险。
　　中国银行在认真总结黑龙江河松街支行案件的教训后，召开了全行电视电话会议和防范案件风险研讨会，在2－4月部署开展以会计核算为内容的“拉网式”大检查，并请外部审计评价检查结果。
　　建设银行结合实际提出了六个方面的实施意见，包括严肃查处已发案件、开展防范违法违规行为的专项检查活动、加强对基层机构负责人的监督制约、深入开展业务风险点排查和员工不良行为排查、做好规章制度的清理和维护工作、抓好案件高发行的全面整治活动。
　　———消息来自银监会日前召开的“国有商业银行案件专项治理工作第三次会议”。
　　
　　百度一下(http：／／www.baidu.com)“杨明生”相关网页11000篇。杨明生，1980年进入中国农业银行工作，曾担任中国农业银行工业信贷部主任、中国农业银行天津市分行行长、中国农业银行副行长、党委委员，2001年12月任中国农业银行党委副书记、副行长，2002年12月主持中国农业银行全面工作，2003年9月，就任中国农业银行党委书记、行长。

zhao hang risk

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银监会三颁铁令 招行马蔚华遍发"责任状"

21世纪经济报道 　2005-04-20 16:26:57




　　
　　本报记者　贾玉宝　深圳报道
　　
　　当前国内银行业进入了一个风险集中爆发期———这是4月7日，招商银行行长马蔚华在招行系统2005年分行行长、总行部室总经理研讨班上的判断。据招行稽核部统计，自2000年以来，国内1000万元以上的案件17起，涉案金额87亿元。也因为此，马蔚华在内部报告中称，当前国内银行业进入“风险集中爆发期”。
　　在此背景下，从3月11日到30日，银监会连发3份文件，要求商业银行严防风险。而自3月中下旬以来，所有中资银行(含农信社)都纷纷开始了自查运动。
　　
　　所有中资银行均被涉及
　　事情始于年初2月。
　　2005年2月5日，银监会召开查防商业银行违法违纪案件工作会议，有工、农、中、建、交等银行行长参加；同月18日，又召开股份制商业银行董事长、行长会议。至此，查防范围涉及所有中资银行。
　　但自查结果并不理想，截至2月底，银行案件的数量和金额不断上升。
　　为此，银监会于3月11日紧急发文(银监通【2005】6号)，文件标题为《关于落实案件专项治理，采取有效措施防范银行案件风险的通知》。
　　6号文称，经调查了解，部分商业银行贯彻落实工作仍不到位，尚未采取切实措施深入开展操作风险的查防工作。该文件除转发所有中资银行外，还责成天津银监局转送渤海银行筹备组。但6号文仅三条规定，力度略显不够。
　　3月23日，银监会再次发文(银监发【2005】17号)———《关于加大防范操作风险工作力度的通知》。对照标题，语气已有所加强。
　　同时，17号文内容增至13项，这也被银行业界简称“十三条”。从防范操作风险的规章制度建设、稽核建设、基层行合规性监督、总分行职责制、行务管理公开制，到基层主管轮岗轮调和强制性休假、重要人员8小时以外的行为规范、帐目管理、电脑系统等，17号文都有详细规定。
　　3月30日，银监会再次下发银监办发【2005】77号文，随文下发了《商业银行和农村信用社案件专项治理工作方案》。这意味着，银监会在将防范案件风险予以制度化，并扩至农信社。
　　据一位商业银行人士介绍，专项治理工作方案要求各商业银行总行、省级农信社负责组织，各商业银行及其分支机构成立专项治理工作领导小组，确定一名行领导统一协调组织专项治理工作。银监会及其派出机构成立案件专项治理工作督查指导小组，负责专项治理工作的督促、指导和检查。
　　该方案要求，对涉案金额在1000万元以上的案件，各商业银行总行要组织专案组；对涉案金额在100万元以上的案件，一级分行要组织专案组；对涉案金额在100万元以下的案件，要指定相应分支机构负责人组织查处。
　　各商业银行及其分支机构还被责成在4月底前，将本次专项治理工作的部署落实情况向银监会和当地银监会派出机构报告，并于2005年底前上报专项治理工作总结。这意味着专项治理工作要贯穿全年，甚至是跨年度。
　　方案同时规定，各地银监局要由一把手挂帅，组织专门的机构和人员，督促指导各商业银行分支机构的专项治理工作。对于督促指导不力的银监局，将追究有关负责人的监管责任。
　　
　　招行自查
　　在四大行大案频发的背景下，股份制银行由于发案金额相对较小，社会关注程度不高。但在马蔚华看来，后者的问题性质同样严重。
　　根据银监会的内部通报，仅2004年上半年，11家股份制银行就发生案件22起，涉及金额总计近4亿元。马蔚华称，这些大案要案曝光的频率之高、涉案金额之巨，在国内是从来没有过的，反映了转型时期我国银行业在内控管理的理念、机制、方法等方面，都存在大量的薄弱环节或漏洞。
　　银监会文件下发后，4月中旬，马蔚华与招行所有分行行长签署了操作风险管理责任状。该责任状明确了总行和分支机构的责任。与此同时，招行各分支机构开始了自查。
　　不仅如此，早在今年年初，招行稽核部已实现了垂直化管理的试点改革。
　　1月10日，招行稽核部北京分部成立，该部下辖招行北京、天津、大连、沈阳、济南、青岛等地分行的稽核业务。招行稽核部总经理助理梅艳兼任分部总经理。
　　2005年3月，梅艳自任项目组长，率队开始了对天津分行的项目稽核。稽核涉及所有业务层面，至3月底完成。
　　招行稽核部总经理张雁翎称，招行在全国将设置四个稽核分部，除北京外，另有上海、深圳、西安三个分部，直接统一稽核所在片区的业务。计划本年内全部推开。
　　然而，问题远未结束。与操作风险同步的，还有信用风险和市场风险。
　　马蔚华预测，宏观调控下，银行的不良资产增长会形成一个高峰。虽然2004年不良资产贷款余额和不良率较年初是双降，但考虑到宏观调控对信贷资产的影响存在滞后期，估计2005年不良贷款余额和不良率将攀升。

Lincoln Journal Star Online

Lincoln Journal Star Online
China to put $15 billion into bank to prepare stock sale

By JOE McDONALD/The Associated Press

BEIJING — China announced plans to inject $15 billion into its biggest state-owned commercial bank as part of efforts to turn it into a profitable, freestanding competitor as Beijing opens its financial markets to foreign rivals.



The Industrial and Commercial Bank of China will use the money to replenish its financial reserves, the official Xinhua News Agency reported. Like other state banks, ICBC is burdened by billions of dollars in unpaid loans to state companies.



The communist government is preparing its major state-owned commercial banks to raise capital by selling shares for the first time to private investors, including some abroad.



Regulators believe ICBC is "basically ready" to take such a step, Xinhua said, though date has been announced.



The amount given to ICBC is smaller than the $22.5 billion two other major state-owned banks each received last January in the first stage of the overhaul. Xinhua didn't explain why ICBC was receiving less money.



The money will come from China's foreign reserves, Xinhua said.



Until recently, China's state banks were treated as a source of money to prop up failing government companies, leaving them with too little capital to meet regulatory requirements.



Efforts to reform the industry have taken on added urgency as China prepares to meet commitments to the World Trade Organization to open its financial markets to foreign competitors by 2006.



This is the second round of capital injections into China's major state banks, coming six years after they were given $32 billion in an effort — later judged incomplete — to restore their balance sheets.



ICBC, founded in 1984, is the biggest of China's four main state-owned commercial banks by deposits. But Xinhua said it also faces the most serious financial problems, with up to 20 percent of its loans considered unrecoverable.



Until recently, Chinese law barred banks from declaring loans to state companies uncollectable and writing them off, leaving lenders with unpaid lending on their books for decades.



Now the government has begun turning over outstanding loans to a series of new debt-management agencies, which try to obtain payment by seizing assets or accepting shares in debtor companies.



A handful of Chinese banks have formed ventures with U.S., European and other partners, benefiting from access to investment capital and more advanced banking skills.



Last year, British-bank HSBC Holdings PLC bought a near 20 percent stake in Shanghai-based Bank of Communications, China's fifth-largest bank. Citigroup Inc. of the United States, Dutch lender ING Groep NV and others have announced plans to buy into smaller banks.



ICBC announced a venture in March with American Express Co. to issue credit cards.



ICBC and other Chinese banks also are struggling to modernize their accounting, plugging gaps that have permitted massive thefts through phony loans and other schemes.

ICBC reveals reform plan

ICBC reveals reform plan
ICBC reveals reform plan
By Su Bei (China Daily)
Updated: 2005-04-23 08:46

The Industrial and Commercial Bank of China (ICBC), the country's largest lender, said on Friday it plans to finish its shareholding reform this year and then seek an initial public offering for domestic and overseas markets.

President Jiang Jianqing said the reform should be a thorough reshuffling, which must not fail.

After the reshuffle, ICBC should have a sufficient capital adequacy ratio and a strict internal control system, he said. "Its major business indicators should reach the upper level among international competitors."

"Our aim is to build ICBC into a large modern commercial bank with international competitiveness," he said.

Wang Zhao, a senior researcher with the State Council Development Research Centre, said there is an urgent need for Chinese commercial banks to sharpen their competitive edge, as foreign banks will enter the Chinese market without restrictions before the end of 2006.

"They will have to lower the rate of non-performing loans, get rid of historical financial burdens and raise their capital adequacy to international standards," he said.

The ICBC has yet to release its major business figures for the first quarter. Its non-performing loans stood at 19.1 per cent at the end of last year and its capital adequacy ratio was 5.52 per cent, far below the minimum 8 per cent requirement.

On Thursday, the People's Bank of China, the central bank, said the State will inject US$15 billion to boost ICBC's capital.

Although the bailout is far less than the US$22.5 billion China Construction Bank and Bank of China each got in December 2003, it will help increase ICBC's capital adequacy ratio to 6 per cent.

The international rating agency Standard & Poor's Ratings Services said on Friday that the US$15 billion capital injection represented a further positive step by the Chinese Government to resolve the problems of the country's banking system.

"The injection is likely to form part of a sizable recapitalization package for ICBC, which needs to address its inadequate capitalization and a large shortfall in its loan loss provisions," it said in a statement.

"The action reinforces our belief that the Chinese Government is likely to provide additional support for ICBC in the short term," said Standard & Poor's credit analyst Ryan Tsang.

According to the People's Bank of China, the State will allow ICBC to issue subordinated debt to increase its capital to the minimum 8 per cent required by regulators.

Yahoo! News - China in 15 billion dollar bailout of state-run ICBC

Yahoo! News - China in 15 billion dollar bailout of state-run ICBC

China in 15 billion dollar bailout of state-run ICBC

Fri Apr 22, 4:09 AM ET


SHANGHAI, (AFP) - The Chinese government has authorised a 15 billion dollar bailout of Industrial and Commercial Bank of China (ICBC), the country's largest but financially weakest lender, the central bank said.


AFP/File Photo

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"Recently the State Council has approved the share holding reform of ICBC," the People's Bank of China said.


"Through the foreign exchange reserves, a capital injection of 15 billion dollars will boost the core capital adequacy ratio of the (ICBC)," said a Xinhua news agency dispatch posted on the central bank's website.


The long-awaited move, part of a broad program of banking reform that began more than a year ago, is aimed at boosting the state-run bank's core capital adequacy ratio (CAR) to six percent, it said.


ICBC's current 5.52 percent CAR is well below the eight percent minimum set under the Basel Accord for commercial banks, and accepted by China's banking regulator, that is a must for a potential overseas listing.


The cash injection is expected to pave the way for an eventual overseas stock offering to further shore up the bank's finances, while providing an unprecedented test of Beijing's ability to reform its troubled financial sector ahead of sector-wide liberation at the end of 2006.


"Its all about the government paying the bill for the banks so a better system of multiple share holders can be created and the historical problems of the banks can be solved," said Zhao Xianming, financial analyst from Great Wall Securities.


The handout will be financed from China's massive foreign exchange reserves, which stood at 659.1 billion dollars at the end of March, the central bank said.


ICBC aims to "finish its share holding reform in 2005 and then create the conditions and seek the opportunities to gain a public listing both in domestic and overseas markets," ICBC chief Jiang Jianqing said in a statement.


"Its a complicated and systematic project with high standards, a reform that we cannot afford to fail in," Jiang said.


ICBC is the third of China's big four state-owned commercial banks to win a bailout by Beijing although the amount had been expected to well exceed the 20 billion dollar mark.


In December 2003, the Bank of China and the China Construction Bank received 22.5 billion dollars each to clean up their balance sheets and prepare them for listing.


The move helped boost the CARs at the two banks to around eight percent while reducing their non-performing loan (NPL) ratios to below 10 percent. Last year ICBC had a non-performing loan ratio of 19 percent.


"The other two banks are in a hurry to get listed so they got more money while ICBC still has a couple of years before its listing and should be capable of solving part of its capital adequacy problems through its own profits," said Zhao of Great Wall Securities.


Those bailouts followed an earlier lifeline extended to all four of the big banks, which are still saddled with hundreds of billion of yuan in bad loans after years of easy lending and corrupt practices.


The Agricultural Bank of China is awaiting a similar package that would complete the financial rescue of the nation's four biggest banks.


Last month central bank governor Zhou Xiaochuan said the stock offerings of state-owned Bank of China and the China Construction Bank were now only a matter of time with preparations largely completed.

TheDeal.com - China bails out another bank

TheDeal.com - China bails out another bank







China bails out another bank
by Shu-Ching Jean Chen in Hong Kong Posted 02:26 EST, 22, Apr 2005


The Chinese government on Friday, April 22, took the long-awaited step of recapitalizing the country's largest bank by promising to inject 124 billion renminbi ($15 billion) into the Industrial and Commercial Bank of China.

The capital prop-up was expected as part of a restructuring designed to put the bank's scandal-ridden past behind it and to attract foreign investors to an initial public offering tentatively scheduled before the end 2009. But analysts expected it to be bigger, given the extent of ICBC's bad debts and the $22.5 billion cash injections handed to each of its smaller rivals, Bank of China and China Construction Bank, in 2003.

"The amount is not sufficient," said May Yen, a banking analyst at Moody's Investors Service. "They need at least more than double that to reach the performance targets comparable with Bank of China and China Construction Bank.''

China has been trying to whittle away the massive bad debts of its four largest banks to make them financially self-sufficient by listing them on stock markets. The task is huge, however, as the banks for decades have propped up money-losing state businesses and are saddled with nonperforming loans. Last year, China's national auditor chastised ICBC for irregularities, including false documentation for loans and lending losses.

China's business dailies splashed the ICBC announcement in bold headlines Friday, quoting state news outlet Xinhua News Agency. It said the central government would give its foreign exchange unit, Central Huijin Investment Co. Ltd., a 50% stake in ICBC to expand its equity base to Rmb248 billion. The Ministry of Finance would hold the remaining 50%.

That the injection is smaller than what No. 2 Bank of China and No. 3 China Construction Bank received partly reflects the complexity of problems at ICBC. The government has also attached tougher rules on the bailouts as it learns from previous experiences.

The government will "enact more stringent outside monitoring and auditing measures to ensure that the security and reason returns in the use of the national capital," Xinhua said.

All the top three banks are preparing for IPOs, which would be regarded as a stamp of confidence from international investors on China's success in overhauling the banking sector. Bank of China and Construction Bank hope to stage IPOs this year, despite a rash of scandals.

The future of the nation's fourth-largest lender, Bank of Agriculture, is less certain as the depth of its bad debts, which have never been published, is believed to be more severe.

Given ICBC's scale and its nonperforming loan ratio of 19.6% as of June 2004, analysts doubt the recapitalization can return it to health. With an asset base of about Rmb6 trillion, ICBC accounts for one-fifth of the nation's banking sector. The accounting firm Ernst & Young has been hired to audit ICBC assets.

Fitch Ratings estimated as much as $40 billion would be needed to lower ICBC's nonperforming loans down to below 5%, the level post-recapitalized Bank of China and China Construction Bank have achieved.

The recapitalization would raise ICBC's core capital adequacy ratio to 6%, up from more than 4%, Xinhua said. When complemented with a secondary debt issuing, ICBC's capital adequacy ration would rise above the official minimal of 8%

Business finance news - currency market news - online UK currency markets - financial news - Interactive Investor

Business finance news - currency market news - online UK currency markets - financial news - Interactive Investor
ROUNDUP - China approves 15 bln usd cash injection into ICBC

Article layout: reformatted
BEIJING (AFX) - China's State Council, the top government body, has approved the
injection of 15 bln usd in foreign exchange reserves into the Industrial and
Commercial Bank of China (ICBC).

The cash injection, which is part of a broad program of banking reform, is aimed
at boosting the core capital adequacy ratio of the country's largest bank to six
pct.

ICBC's core and non-core capital adequacy ratio stood at 4.77 pct and 5.52 pct
respectively at the end of 2003, well below the eight pct minimum level set
under the Basel Accord for commercial banks.

ICBC said in a statement that an inadequate capital base and heavy non-
performing loans (NPL) burden undermined its restructuring and its ability to
compete against foreign entrants.

The bank's multi-billion dollar bail-out will be financed from China's foreign
exchange reserves, which stood at 659.1 bln usd at the end of March this year.

The central bank will eventually issue subordinated bonds to raise ICBC's ratio
to more than eight pct.

China is trying to strengthen its banking system before fully opening its
financial markets to foreign players at the end of 2006 in line with its
commitments to the World Trade Organization.

ICBC is the third of the big four state-owned commercial banks to be bailed out
by the government.

At the end of 2003, the Bank of China (BOC) and the China Construction Bank
(CCB) received 22.5 bln usd each to clean up their balance sheets and prepare
them for listing.

Those bailouts followed an earlier lifeline extended to all four of the big
banks, which are still saddled with bad loans from years of policy-driven
lending and corruption.

Industry analysts said government is likely to intervene again on ICBC's behalf
ahead of its public listing.

They predict the bank will receive another capital boost, could divest more of
its other NPLs and introduce a foreign strategic investor. "The injection is
likely to form part of a sizable recapitalization package for ICBC, which needs
to address its inadequate capitalization and a large shortfall in its loan loss
provisions," Standard & Poor's said in a statement.

More than 70 bln of the 74.7 bln yuan in operating profits that ICBC earned last
year was used to write off NPLs and to set additional provisions against loan
losses.

If the bank does as BOC and CCB have done, it will treat the 15 bln usd grant as
new capital, while using its own accumulated cash reserves to cover loan losses.

The extra capital is likely to boost investor confidence ahead of the bank's
expected public stock offer and listing.

ICBC said in its statement that it aims to finish its joint-stock restructuring
this year, but will wait for the right time to list on both domestic and
overseas capital markets.

That will leave the Agricultural Bank of China, considered the bank with the
biggest NPL problem, as the last in line to receive a government funding package
and make it to the capital markets.

BOC and CCB were selected first for capital injections as part of a pilot reform
project, to be completed this year, involving another clean-out of NPLs, the
introduction of foreign strategic investors, internal restructuring and
corporate governance reforms.

sr/wk/dg/tr

China ICBC needs more capital, restructuring ahead of listing - analysts Messenger | Yahoo! Finance-

China ICBC needs more capital, restructuring ahead of listing - analysts Messenger | Yahoo! Finance-AFX News on Yahoo! Finance

Friday April 22, 05:30 AM

China ICBC needs more capital, restructuring ahead of listing - analysts
BEIJING (AFX) - China's 15 bln usd bail-out of its biggest bank, the Industrial and Commercial Bank of China (ICBC), will not go far enough to prepare the lender for public listing, analysts said.
They expect the government to inject more capital into ICBC, reorganize the bank and secure a strategic foreign partner before it goes to the capital markets.
The bail-out, approved by China's top government body, is aimed at boosting the state-run bank's core capital adequacy ratio (CAR) to six pct.
The central bank will eventually issue subordinated bonds to raise ICBC's CAR above the eight pct minimum set under the Basel Accord for commercial banks.
ICBC said on its website that an inadequate capital base and heavy non-performing loans (NPL) burden could undermine its ability to compete against foreign entrants, which officially gain entry to China's banking sector at the end of next year.
Morgan Stanley economist Andy Xie said the cash injection fell short of expectations.
'I thought it was going to be more. It's the biggest bank in China.'
Two other state-run banks, Bank of China (BOC) and China Construction Bank (CCB), received 22.5 bln usd each from the government in 2003 to clean up their balance sheets and prepare them for listing.
Xie said it may be too early to say how much ICBC needs from the government, because of uncertainty over what can be recovered of its non-performing assets.
'It's really a big unknown. Any sort of estimate is probably going to be way off,' he said.
Standard and Poor's said in a statement that the 15 bln usd cash injection is probably just one part of a 'sizeable recapitalization package' for ICBC.
'This action reinforces Standard and Poor's belief that the Chinese government is likely to provide additional support for ICBC in the near term,' S&P credit analyst Ryan Tsang said.
Tony Liu, banking analyst with DBS, also said more announcements could be in the pipeline.
'Unless the government is doing something else in cleaning up the bank, I think the amount seems to be small relative to the size of ICBC,' he said.
ICBC had a NPL ratio of 19.1 pct at the end of 2004.
It spent the bulk of the 74. bln yuan in operating profit it recorded last year covering NPLs and setting aside additional provisions against loan losses.
Liu said that as well as issuing subordinated bonds, ICBC may need to divest more of its NPLs to asset management companies.
'That's one way I can think of (for ICBC) to lower its non-performing assets and also to rebuild its capital base,' he said.
China's 'big four' banks - ICBC, BOC, CCB and Agricultural Bank of China - jointly shifted 1.4 trln yuan in NPLs to four asset management companies created in 1999.
Liu said other reforms are also needed because ICBC lacks the banking expertise and sophistication required to compete when the country opens its financial markets in line with its commitments to the World Trade Organization.
'First they need to recapitalise, then internally they also need to do some engineering,' he said.
Xie said that priorities for the bank include strengthening accounting controls and selling equity, ahead of its planned listing, to a strategic foreign investor.
BOC and CCB, which are first in line for an initial public offering (IPO), are already in talks with foreign banks about doing just that.
Liu said based on the time it has taken these banks to restructure, it could be two or three years before ICBC lists.
ICBC, however, said on its website that it will finish restructuring this year.
'The end game is still IPO,' Xie noted.
(1 USD = 8.3 yuan)

CNN.com - China to pump $15bn into�bank - Apr 22, 2005

CNN.com - China to pump $15bn into�bank - Apr 22, 2005China to pump $15bn into bank



BEIJING, China (AP) -- China announced plans Friday to inject $15 billion (&euro11.5 billion) into its biggest state-owned commercial bank as part of efforts to turn it into a profitable, independent competitor as Beijing opens its financial markets to foreign rivals.

The Industrial and Commercial Bank of China will use the money to replenish its financial reserves, the official Xinhua News Agency reported.

Like other state banks, ICBC is burdened by billions of dollars in unpaid loans to state companies.

The communist government is preparing its major state-owned commercial banks to raise capital by selling shares for the first time to private investors, including some abroad.

Regulators believe ICBC is "basically ready" to take such a step, Xinhua said, though no date has been announced.

The amount given to ICBC is smaller than the $22.5 billion (&euro17 billion) given each to two other major state-owned banks last January in the first stage of the overhaul. Xinhua didn't explain why ICBC was receiving less money.

The money will come from China's foreign reserves, Xinhua said.

China's state banks until recently were treated as a source of money to prop up failing government companies, leaving them with too little capital to meet regulator requirements.

Efforts to reform the industry have taken on added urgency as China prepares to meet commitments to the World Trade Organization to open its financial markets to foreign competitors by 2006.

This is the second round of capital injections into China's major state banks, coming six years after they were given US$32 billion in an effort -- later judged incomplete -- to restore their balance sheets.

ICBC, founded in 1984, is the biggest of China's four main state-owned commercial banks by deposits. But Xinhua said it also faces the most serious financial problems, with up to 20 percent of its loans considered unrecoverable.

Until recently, Chinese law barred banks from declaring loans to state companies uncollectable and writing them off, leaving lenders with unpaid lending on their books for decades.

The government has begun turning over outstanding loans to a series of newly created debt-management agencies, which try to obtain payment by seizing assets or accepting shares in debtor companies.

A handful of Chinese banks have formed ventures with U.S., European and other partners, benefiting from access to investment capital and more advanced banking skills.

Last year, British-bank HSBC Holdings PLC bought a near 20 percent stake in Shanghai-based Bank of Communications, China's fifth-largest bank. Citigroup Inc. of the United States, Dutch lender ING Groep NV and others have announced plans to buy into smaller banks.

ICBC announced a venture in March with American Express Co. to issue credit cards.

ICBC and other Chinese banks also are struggling to modernize their accounting, plugging gaps that have permitted massive thefts through phony loans and other schemes.

In January, the government announced the arrest of dozens of government officials and others implicated in a scheme to steal 7.4 billion yuan ($900 million; euro700 million) from ICBC through fraudulent loans.



--------------------------------------------------------------------------------

Copyright 2005 The Associated Press. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed.

Find this article at:
http://www.cnn.com/2005/BUSINESS/04/22/china.bank.ap/index.html?section=cnn_latest

ICBC reveals reform plan

ICBC reveals reform planICBC reveals reform plan
By Su Bei (China Daily)
Updated: 2005-04-23 08:46

The Industrial and Commercial Bank of China (ICBC), the country's largest lender, said on Friday it plans to finish its shareholding reform this year and then seek an initial public offering for domestic and overseas markets.

President Jiang Jianqing said the reform should be a thorough reshuffling, which must not fail.

After the reshuffle, ICBC should have a sufficient capital adequacy ratio and a strict internal control system, he said. "Its major business indicators should reach the upper level among international competitors."

"Our aim is to build ICBC into a large modern commercial bank with international competitiveness," he said.

Wang Zhao, a senior researcher with the State Council Development Research Centre, said there is an urgent need for Chinese commercial banks to sharpen their competitive edge, as foreign banks will enter the Chinese market without restrictions before the end of 2006.

"They will have to lower the rate of non-performing loans, get rid of historical financial burdens and raise their capital adequacy to international standards," he said.

The ICBC has yet to release its major business figures for the first quarter. Its non-performing loans stood at 19.1 per cent at the end of last year and its capital adequacy ratio was 5.52 per cent, far below the minimum 8 per cent requirement.

On Thursday, the People's Bank of China, the central bank, said the State will inject US$15 billion to boost ICBC's capital.

Although the bailout is far less than the US$22.5 billion China Construction Bank and Bank of China each got in December 2003, it will help increase ICBC's capital adequacy ratio to 6 per cent.

The international rating agency Standard & Poor's Ratings Services said on Friday that the US$15 billion capital injection represented a further positive step by the Chinese Government to resolve the problems of the country's banking system.

"The injection is likely to form part of a sizable recapitalization package for ICBC, which needs to address its inadequate capitalization and a large shortfall in its loan loss provisions," it said in a statement.

"The action reinforces our belief that the Chinese Government is likely to provide additional support for ICBC in the short term," said Standard & Poor's credit analyst Ryan Tsang.

According to the People's Bank of China, the State will allow ICBC to issue subordinated debt to increase its capital to the minimum 8 per cent required by regulators.

Interate rate China Internet Information Center

China Internet Information Center

Trade marketization China Internet Information Center

China Internet Information CenterSymbol and Degree of Marketization of Domestic Trade

To study the process of China's market-oriented domestic trade, we have to determine indices to be dealt with by combining China's actual condition. Under the traditional planned economy system, the domestic market was divided into several parts, some of which were brought into line with welfare. When reviewing the marketization of domestic trade, therefore, indices ought to be selected from different sides and described from different angles.

(I )Autonomous Trading Entity

The increase of autonomy and independence of trading entities (including enterprises, peasant households, individual businesses and consumers) and the decrease of dependence and reliance on government imply the extent of marketization has been deepened.

Studying trading entities was taken as a primary standard for the extent of development of market-oriented domestic trade, as most trading entities were state-owned circulation enterprises and cooperative enterprises under the traditional planned economy system. Those enterprises were characterized by an intensive administration and a high monopoly without any independence and power to make decision; business scope and commodity circulation determined by the administrative system; a trading method of planned purchase and supply and unified purchase and sale with a nature of "official commerce"; and the power of pricing in government' s hands rather than trading entities'. To judge China' s marketization of domestic trade, a trading entity's operational behavior has to be analyzed, so as to find out whether it makes its own managerial decision and takes full responsibilities for its own profits and losses and to investigate whether its reliance and dependence on government have been weakened or even disappeared.

With the deepening of reform in economy system, the domestic trading entities have gradually shaken off the government control. The following is a main manifestation in this regard: firstly, the traditional state-owned circulation enterprises and cooperative enterprises have been transformed into liability limited companies and joint stock limited companies in line with the provisions of Company Law of the People' s Republic of China, enjoying a full freedom in organizing circulation, determining price and conducting trading activities. Secondly, there are still a great number of individual businesses, who conduct their business strictly in line with market rule. Generally, the average life of such private businesses is comparatively short, while it is easy to for them to change their line of business. In addition, those individual businesses take an unlimited responsibility for their debts. Thirdly, by accumulating assets, some individual businesses have developed into modem trading enterprises with joint equity. Where the traditional state-owned circulation enterprises and cooperative enterprises may not become independent trading entities unless by means of transformation, these newly developed enterprises are autonomous trading entities at the very beginning of their establishment. Fourthly, a new sign accompanied with the reform is foreign capitals ' entry into China ' s domestic trade area, forming trading entities that can compete equally with the domestic enterprises. For example, in the field of retail, we may see such world-known enterprises as Wal-Mart of the U. S, Carrefour of France, Itoyokado & Hot-long of Japan, Pension of Malaya and Metro of Germany.

Table shows the fundamental condition of wholesale, retail, catering services of enterprises above certain specified size classified by type of registration in 2001. In the wholesale trade, the number of state-owned enterprises accounted for 57.7 percent of the total, the number in the retail trade 37.3 percent and the number in catering services 18.7 percent. It is noted that the state-owned enterprises hereby have been transformed towards joint equity companies in conformity with the provisions of Company Law of the People " s Republic of China.

(Ⅱ) Price

Price plays a vital role in a market economy. As an incentive factor impelling the producer to produce commodities demanded by the society, it reflects the degree of scarcity of resources. Moreover, price also serves as a significant bridge for participants in economic activities to exchange information. Due to the decentralized decision-making by the economic entities in market economy, price becomes an automatic signal to coordinate each decision-making entity ' s behavior. Consequently, we may never judge the development of market-oriented domestic trade without price, especially the price formation mechanism.

In the domestic trade, the most obvious sign for marketization is the shift in price formation from government to market, i.e. , price determined by the market supply and demand. Besides the marketization of product price (including means of consumption and production goods), here we can discover the more important the marketization of productive factor price. As inputs of production process, the prices of productive factors like labor, capital and land etc (respectively in the forms of wage, interest, land price and rent etc ) have a direct impact on product price, and their marketization shows that China has made an important step towards market-oriented economy.

For this reason, when studying the marketization of domestic trade, the stress ought to be laid on the proportion of product price determined by the market. As for the measurement of factor price, we can find the details in other relevant chapters. Specifically, the indices selected mainly include: percentage of market-oriented industrial product price in the total sales, and the percentage of market-oriented farm produce price in the total trades.

In China's domestic trade, the commodity price takes three forms: government-valorized price, government-guided price and market-determined price based on various commodities. Government-valorized price means the commodity price and charge standard formulated by price administration authorities and competent business departments above the county level (inclusive ) within the extent of power authorized by the government, mainly involved in key production goods and necessities related to the national economy and the people's livelihood. Government-guided price refers to the product price and charge standard formulated by enterprises under the guidance of price administration authorities and competent business departments above the county level (inclusive) by means of stipulating basic price, floating range, price difference, profit margin, ceiling price and lowest price limit within the extent of power authorized by the government. Market-determined price means the product price and charge standard formulated by the producer and operator, covering the liberalized prices for petty commodities and product prices at country fairs. Government-guided price was formed on the basis of market price.

To be specific, the total percentage of government-valorized price in 2001 accounted for 2.7 percent of total retail sales of consumer goods, 0.5 percent down compared to that in 2000. This decrease contributed to the control over prices of domestic agricultural film materials and pure gold ornaments etc having been lifted, the considerable drop in some drugs' prices, and the cut of items that needed to be approved by the government in pricing and consequently the control over prices lifted at localities. The total percentage of government-guided price accounted for 1.3 percent, 0.3 percent higher than that in 2000. This was mainly owning to the price for partial consumer goods having been shifted from government-valorized to government-guided. The percentage of market-determined price took up 96.0 percent, 0.2 percent higher than that in 2000.

Among the total purchases of farm and sideline products, the total percentage of government-valorized price accounted for 2.7 percent, 2 percent lower than that in 2000. This was resulted from the control over prices of grain in key grain selling areas having been lifted and consequently the percentage of government-valorized price was shrunk. The total percentage of government-guided price took up 3.4 percent, 0.3 percent higher than that in 2000, among which the percentage of central government-guided price 0.1 percent, 0.7 percent down than that in 2000; the percentage of government-guided prices at the provincial level or below 3.3 percent, 1.3 percent up than that in 2000. The main reason for this change was that the central government delegated the power of valorizing silkworm cocoon and sugar to the local authorities for guiding price, resulting in a decrease in the percentage of government-guided price and an increase in the percentage of local government-guided price. The percentage of market-determined price occupied 93.9 percent, 1.4 percent higher than that in 2000.

In the total sales of production goods, the total percentage of government-valorized price took up 9.5 percent, 1.1 percent down than that in 2000, among which the percentage of the central government-valorized price 6.8 percent, 1.1 percent up than that in 2000. The main reason for this change was that after urban and rural areas shared the same price in electricity, the power consumption went up, thus resulting in an increase in the percentage of government-valorized price. The percentage of government-valorized prices at the provincial level or below accounted for 2.7 percent, almost the same as that in 2000. In addition, the total percentage of government-guided price accounted for 2.9 percent, 1.3 percent down than that in 2000, among which the percentage of central government-guided price 2.0 percent, 1.5 percent down than that in 2000; the percentage of government-guided prices at the provincial level o1" below 0.9 percent, 0.2 percent up than that in 2000. This contributed to the control over prices of coal for power generation and natural rubber etc, thus resulting in a decrease in the percentage of government-guided price. The percentage of market-determined price accounted for 87.6 percent , 0.2 percent higher than that in 2000.

It deserves to be mentioned that the provinces and municipalities with 100 percent market-determined price in the total purchases of farm and sideline products in 2000 included Beijing, Tianjin, and Qinghai; while in 2001 there were Beijing, Tianjin, Hebei, Hainan and Qinghai.

By the end of 2001, the categories valorized by the government have been reduced to 13 from 141 in 1992.

In consideration of the above mentioned, the commodities and services valorized by the government only accounted for a small fraction of domestic trade, and the overwhelming majority were market-oriented. The market-determined price was in a dominant position. This shows that the government ought to lay more emphasis on strengthening the legal construction of price, formulating price policies, regulating pricing activities and maintaining market order for fair competition while trying to do a good job in valorization.

( Ⅲ ) Commercialization Rate of Urban Housing

The commercialization rate of urban housing will be enumerated separately to serve as the index for studying the marketization of domestic trade, as under the planned economy system urban housing were distributed in kind to residents as a welfare. The rural housing is not to be discussed here due to the fact that it was basically under market domination, apart from some distributed in the Land Reform Period (from late 1940s to early 1950s). With the speeding up of the reform mad commercialization of housing, the expenses that the resident spends in purchasing housing will see a remarkable increase. Therefore, the research of commercialization rate of urban housing is of great significance in judging the marketization of domestic trade.

For this reason, our selected indices are: the commercialization rate of urban housing and the percentage of urban residents ' housing expenses in their total consumption expenditures etc. An important symbol of file marketization of domestic trade is tile increased commercialization rate of urban housing. This will be explained in two aspects.

Firstly, among the sales of urban dwelling houses, the proportion of urban dwelling houses purchased by individuals has had a notable increase. In 1992, the sold dwelling houses were 38,120,000 square meters, including the dwelling houses purchased by individuals 14,560,000 square meters, accounting for 38.2 percent ; while in 2001 the dwelling houses were 199,380,000 square meters, covering the dwelling houses purchased by individuals 182,500,000 square meters, accounting for 91.5 percent.

Secondly, the percentage of housing expenses that urban residents spend saw a continuous growth in their total consumption expenditures. This means that with the reform of the housing system, urban residents have to take more money out of their pocket to pay housing bills. In 1990, the urban consumption expenditures per head per annum reached 1,278.89 yuan, including the housing expenses 60.86 percent, accounting for 4.79 percent ; in 1995, the urban consumption expenditures per head per annum were 3,537.57 yuan, including the housing expenses 250.18 yuan, accounting for 7.07 percent ; in 2000, the urban consumption expenditures per head per annum were up to 4,998.00 yuan, including the housing expenses 500.49 yuan, accounting for 10.01 percent ; in 2001, the urban consumption expenditures per head per annum reached 5, 309.01 yuan, including the hosing expenses 547.96 yuan, accounting for 10.32 percent . The changes in the years of 1990, 1995, 2000 and 2001 are shown in Figure 6 - 2.

(Ⅳ) Expansion of Private Consumption

Besides the commercialization of urban housing, many fields that used to be recognized as welfare areas (e.g., medical and health care, non-compulsory education etc) have been progressively pushed into market, and the extent of private consumption has been enlarged constantly. These consumptions have a very close relation with the change of labor' s occupation (flow of labor forces) and the development of labor market, as those characterized by welfare may fail to push into market unless labors no longer attach themselves to a single fixed work unit.

In these consumptions, some products pertained to quasi-public goods. When consumers reach the point of congestion, competition emerges. In addition, in other fields of consumptions such as medical and health care, they imply not only a market relation, but also are involved in human health and social civilization. For these masons, when judging the marketization by means of studying the expansion of private consumption, factors other than market also need to be considered. The index we mainly selected here is the increase in expenditures of medical and health care and education for urban residents.

As one of the important aspects in marketization of domestic trade, the percentage of medical and health care expenditures of urban residents in their total expenditures witnessed a continuous increase year after year. In 1993, urban families ' medical and health expenses accounted for 2.61 percent of the total consumption expenditures. In the following years, it remained a constant growth, up to 6.36 percent in 2000 and 6.47 percent in 2001.

Meanwhile, the percentage of tuition mad miscellaneous fees in China's total education funds was also on a continuous increase. In 1991, the ratio of tuition mad miscellaneous fees was 4.42 percent of the total education funds, and 5.06 percent in 1992. In 2000, the ratio hit 15.45 percent. Figure 6- 4 shows the changed condition in the percentage of tuition and miscellaneous fees from 1991 to 2000.

(China.org.cn November 7, 2003)

Hu China Internet Information Center

China Internet Information Center
Stable Renminbi Good for Development: President Hu

President Hu Jintao said Sunday at the Asia-Pacific Economic Cooperation (APEC) CEO Summit that maintaining the basic stability of the yuan's exchange rate not only is in the best interests of the Chinese economy, but conforms to the requirements for economic development in the Asia-Pacific region and the world at large.

"The market-based, single and managed floating exchange rate system, which China is now following, is consistent with the current status of the country's development, financial regulation and the sustainability of its enterprises," Hu said in an address to the summit, attended by over 1,000 participants.

He noted that China's maintenance of the yuan's stability during the 1997 Asian financial crisis, when many of its neighbors depreciated their currencies substantially, made a contribution to financial and economic stability in Asia and the whole world.

"This time, we will act in the same responsible manner in the handling of the renminbi exchange rate issue," Hu said. "We will maintain the basic stability of renminbi at a reasonable and balanced level, and take further steps to improve the rate-forming mechanism of renminbi along with deepened financial reforms."

In his speech on sustained economic development, he said APEC should play a bigger role and called for exchange among members for success in economic restructuring.

The president also expressed his support for an open and rule-based multilateral trading system, and his confidence in the successful conclusion of the Doha round of negotiations of the World Trade Organization.

He said all members should continue to promote trade and investment liberalization, remove barriers and create a fair environment for competition.

Hu and other APEC economic leaders are expected to display their political will to seek a successful conclusion to the Doha round, at the APEC Economic Leaders' Meeting today and tomorrow.

(China Daily October 20, 2003)

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