IB Times – by Moran ZhangAfter decades of relying on state banks, China is finally ready to open up the financial sector to private capital. Regulators announced it will roll out a “pilot project” to allow the creation of up to five privately financed banks this year to support economic growth.
The China Banking Regulatory Commission would maintain “prudential regulatory standards” in approving private banks, it said in a statement following a meeting on banking supervision. It gave no details of who would be allowed to set up a bank or in what lines of business they can compete.
The state-owned banking industry lends mostly to government companies. Small and medium-size firms are major employers, but are seen as a credit risk by state banks and have traditionally relied on loans from informal sources — friends, family, other businesses, and underground banks – to run their operations. Giving those credit-starved firms better access to credit will help support economic growth and job creation.
The CBRC also said it will try to relax the threshold for foreign capital to enter China’s banking sector and ease yuan operation requirements, while more policies will be issued to support banking reform in the Shanghai free trade zone and financial reform pilot zone, the state-owned Xinhua news agency reports.
The announcement comes as Beijing tries to rein in a surge in local government debt and shadow banking.
An official audit released last week showed that China’s local government debt reached 17.9 trillion yuan ($2.95 trillion) at the end of June 2013, or up from 10.7 trillion at the end of 2010.
Overall, 43 percent of local government’s debt came from nonbank sources. Shadow banking institutions, including trust companies, securities firms, insurance companies and leasing companies accounted for 11 percent of the local government debt. The rest of the nonbank debt is from bonds, individuals and a variety of loan guarantees.
Moran Zhang is a finance and economics reporter at The International Business Times. Her work has appeared in the Wall Street Journal Digital Network’s MarketWatch, United Press International and the San Diego Union Tribune. She is a graduate of the Medill School of Journalism at Northwestern University and holds a master’s degree in business journalism. She is based in New York. Moran can be reached at m.zhang@ibtimes.com, and she can be followed on Twitter at @moranzhang.
http://www.ibtimes.com/china-set-five-private-banks-2014-1529790
What you won’t hear about in China is that inflation is so high that people like my mother in law in China can barely afford to buy meat each month as the price for a pound of meat is literally around $16 U.S. dollars (or over 100 CNY/RMB). It’s atrocious!
Yet the bastards in their government are stealing all our resources, all the world’s gold and buying up our country wholesale. It’s slavery in both our countries.
Again, the governments around the world should be eradicated, not the people. Once the governments are taken back by the people, then the countries will be restored. Until then, we are all continuing to play into their con game for no reason, as the people of the world outnumber these bastards millions and billions to one. It’s insanity.
I can almost bet – if I was a betting man – that they have a dog and cat shortage over there in China then, I suppose that that would go for rats etc. too if the meats prices are so high. Ya go to the oriental district and you never see squirrels,stray dogs and cats ever on the loose never, and ya know they never seem to have dogs and cats for any lenghth of time either, Hmmm I wonder why. Gives new meaning to Shepard Pie – as in german shepard pie. 🙁