Other major topics to be discussed at the conference include modification of the sector's regulatory framework, and the formula for the restructuring of the Agricultural Bank of China, the weakest one among major State banks and the last one to be revamped.

The government has kept a low key about the conference, partly because of sensitivity of the issues to be discussed.

Industrial insiders said about ten task forces, spearheaded by high-ranking financial officials, were formed to work on different issues and to provide policy recommendations to top decision makers.

Management of State interests in major financial institutions was among issues that have been hotly discussed.

The crux of the issue is how to strike the right balance between maintaining appropriate State control over these institutions and installing a market-oriented mechanism, which is crucial for the financial institutions' efficiency.

The State-owned Assets Supervision and Administration Commission is now the sole representative for State ownership in major non-financial State companies. Financial institutions were not put under the umbrella of the commission to avoid the financial institutions being forced by the commission to support non-financial firms.

But there has been no single body that is solely responsible for supervising the financial institutions. Both the Ministry of Finance and Huijin have some say. As for personnel, top executives are appointed by the central government.

It is obvious that this fragmented supervisory mechanism is a hindrance in making the banks truly commercially viable institutions.

Reform of financial sector is believed to an item high on China's unfinished agenda of economic reforms because an efficient allocation of financial resources is vital to an economy.

Four asset management companies were set up after the 1997 conference to take over massive non-performing loans from the four State banks, which at the time were believed to be technically insolvent. The 2002 gathering led to establishment of the China Banking Regulatory Commission and restructuring schemes that eventually led to three major State banks' listings at international and domestic stock markets.

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