China: WTO deadline on banking to be met
(AFP)
Updated: 2005-12-05 22:09

Liu's comments followed a report in the China Business News on Monday that said China Huijin Investments, the Bank of China's largest shareholder, had finally approved a deal, without saying how big the stake would be.

The equity stake was expected to aid the Bank of China in it's planned listing next year.

Liu also announced that foreign banks will now be allowed to engage in yuan-denominated business in the booming southern coastal cities of Shantou and Ningbo with both Chinese and foreign companies and individuals.

Western banks will also be allowed to do yuan-denominated business in the interior cities of Harbin, Changchun, Lanzhou, Yinchuan and Nanning.

With the new openings, China has allowed foreign banks to do yuan business in 25 cities, well ahead of the December 2006 WTO-mandated deadline in which such services will be allowed nationwide.

Chen Xingdong, chief Beijing-based economist for BNP Paribas, told AFP that the opening up of the banking sector was a fine balancing act for the Chinese government and foreign institutions.

"China can only see the pressure that foreign banks will bring in with the opening of the banking sector," Chen said.

"But this is going to be a learning experience for everyone, I doubt that the foreign banks will come into China in an aggressive way; it is going to be more gradual."