"During 2004, the opening up of China's banking industry has been widened further," said Liu Mingkang, chairman of the China Banking Regulatory Commission (CBRC). He was speaking at a press conference held by the Information Office of the State Council on Wednesday.

In order to allow greater space for foreign banks to develop, the number of cities that let them operate RMB services increased from 9 to 13 last year. They have also been approved to provide services for Chinese enterprises in areas that have already opened up.

From December 1, foreign banks will be allowed to operate RMB services in Kunming, Beijing and Xiamen, and a year earlier than previously planned in Xi'an and Shenyang. That brings the total number of cities to 18.

By the end of October, 105 foreign banks had been approved to operate RMB services. Of them, 61 were allowed to provide services to Chinese enterprises and 13 approved to carry out online banking.

Last December the CBRC issued rules governing overseas financial institutions' equity investment in Chinese financial institutions, and it has developed healthily.

Previously only three commercial banks received foreign investment. Now, nine have attracted investment from several companies including Citibank and HSBC, and another nine are in negotiations.

Xi'an Commercial Bank has been approved for investment from Canada's Scotiabank, making it the first bank in China's western region to accept foreign investment.

HSBC acquired 19.9 percent of shares of Communication Bank of China, becoming its second largest shareholder.

The bank with most foreign investment, Fujian Xingye Bank, has 24.98 percent of its shares held by three foreign companies.

By following similar strategies Shanghai Bank, Nanjing City Commercial Bank and Pudong Developing Bank have all see obvious and positive changes in their risk management, market expansion and business operations. Market shares and client resources of foreign banks have also rapidly increased.

Earlier last year, the CBRC also opened up automobile financing services, approving preparations for the establishment of five foreign-funded companies involving GM, Toyota, Volkswagen, Ford and Daimler Chrysler.

Two of these financing services have already started operations, adding an entirely new type of non-banking institution to China's financial sector.

On September 1 this year, the CBRC allowed foreign investors to establish foreign-owned financial companies, and encouraged them to become shareholders in domestic firms.

Li said that over the past 20 years foreign-funded banks have become an important force in the banking industry.

By the end of October, 62 companies from 19 countries had established 204 operations, including 163 branches of foreign banks and 16 sub-branches, 14 foreign-funded and joint-funded banks and financial companies and 11 branches.

Foreign banking institutions had established 223 representative offices, and foreign general assets have reached 553.39 billion yuan (US$66.86 billion). That is up 41.44 percent on the same period of 2003, accounting for 8.1 percent of the total.

Since entering the Chinese market, foreign investors and bankers have not only introduced new operational methods and management styles, but have also helped improve overall standards of service, an example of the sector's opening up benefiting all concerned.

(China.org.cn by Wang Qian and Li Jingrong, December 2, 2004)