5 Apr 2012

Hint of competition in banking sector in China

1:54 pm on 5 April 2012

China is looking to increase investment and competition in its financial and banking sectors.

On Tuesday, it almost tripled the amount that international fund managers can invest in China to $80 billion.

At the same time, Premier Wen Jiabao told China National Radio that the monopoly of state-owned banks needs to be broken.

He hinted at allowing private investment in the banking sector, which is dominated by four banks. They include Industrial & Commercial Bank of China and Agricultural bank of China.

State media quoted Mr Wen as saying the banks make profits far too easily.

He said their monopoly was hurting businesses as they had few options to raise capital.

Independent business owners have had to borrow money at high interest rates from informal lenders after being rejected by major banks, who favour other state-controlled enterprises because their debts are implicitly guaranteed by the government.