Press conference by China´s central bank, banking watchdog 03-11-2004 11:26

China's central bank and the country's banking watchdog are scheduled to jointly hold a press conference at 10 a.m., Beijing time. Governor of People's Bank of China Zhou Xiaochuan and Chairman of China Banking Regulatory Commission Liu Mingkang will answer questions from Chinese and overseas media.

For the latest, we now cross live to our reporter Wang Xin, who's standing by at the Great Hall of the People.

Zhou Xiaochuan and Liu Mingkang are now fielding questions from Chinese and international reporters. There are two issues to watch today: reform of China's banking system and the exchange rate of the Renminbi.

China has promised to open its banking sector to foreign banks in 2006 according to its commitments to the WTO. But the country's major state-owned banks are still deeply troubled by a high rate of bad loans and lack of good corporate governance. These problems make them highly uncompetitive compared with their foreign rivals.

Now with only two years to go, China has accelerated the reform of its banking system to reduce financial risks. And the focus of the reform is to introduce a share-holding system in the state-owned commercial banks.

Late last year, the government gave two of the four state-owned banks, the Bank of China and the China Construction Bank, 45 billion US dollars from its foreign reserves to boost their balance sheets. So it will be interesting today to hear how that has been followed up.

Another issue that we should pay attention to is the exchange rate of the Renminbi, and whether there will be any change to China's policy of maintaining a stable exchange rate. There has been heated debate in and outside China on whether the currency is undervalued.

The government has always said that the precondition for a stable economy is a basically stable exchange rate. And it has warned that any gamble on a higher rate could backfire. So it will also be interesting to hear the latest information from the governor of the central bank.


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