Those overseas banks present at the meeting included the Shanghai Branch of Banque Nationale de Paris, Hong Kong and Shanghai Banking Corporation, Banca Nazional del Lavoro, and Swiss Bank Corp..

Financial expert Ying Yixun said it’s Zhejiang’s overall economic environment that attracts so many overseas banks. As one of China’s most quickly developing provinces, Zhejiang has become a hotspot of foreign investment. Meanwhile, private enterprises, which account for 90 percent of Zhejiang’s overall economic volume, are thirsty for financial support to augment their development.

Statistics till the end of June 2002 show that Zhejiang has become the fifth largest province, in financial terms, with deposits exceeding the 1,000 billion yuan (US$120.77 billion) mark, leaving the region behind only Guangdong, Beijing, Jiangsu and Shanghai. Its rate of bad loans is only 8.9 percent. However, many disadvantages such as small company size, low-levels of managerial expertise, and weak competitive aptitude are hampering many of Zhejiang’s financial institutions.

Wang Zhangchun, representative of the Wenzhou Commercial Bank which has a registered capital of over 290 million yuan (US$35.02 million), said that the bank has established many new operations and is experiencing a rapid phase of growth. However, such rapid expansion in operations brings associated problems such as a lack of fund.

He said the bank hopes to cooperate with foreign banks, in order to raise capital reserves, introduce advanced management techniques, and strengthen their overall competitive ability. They aim to follow international practice and encourage joint-stock holdings in commercial banks with the support of overseas or private capital.

A senior official from Zhejiang provincial government said that inline with China’s commitment to the WTO, Zhejiang wants to broaden its cooperation with its overseas counterparts. He said, overseas financial institutions can cooperate with them through the buying of shares, the formation of joint-holdings, the merging or establishing of branches, and assisting with employee training and the creation of agents for financial services.

Deputy secretary-general of the State Economic and Trade Commission (SETC) Gan Zhihe pointed out last month that the field that attracts the most foreign investment into China will shift from the industrial to the service sector. Currently, overseas investors hold shares in both the Shanghai Bank and Nanjing Commercial Bank.

An official from the Hangzhou Branch of the Peoples’ Bank of China pointed out that according to the commitments made by China to World Trade Organization, the opening-up of the financial sector is well inline with the agreed schedule. He also added there is no deadline for overseas banks to hold shares in China’s financial institutions.

(china.org.cn by Tang Fuchun, September 14, 2002)