From a financial natural development perspective, current separate management patterns, to some degree, more favorably benefits the attainment of improvements in supervision capability and development of the finance industry.

But China's finance industry is in for some shocks caused by financial innovation, developments in science and technology and international financial competition. It is essential, therefore, that it is able to meet competitive requirements and thereby achieve victory over its competitors by diversifying its financial services.

The selection of a transition operation pattern should properly settle the contradictions between laggard supervision ability and the financial development demands.

Since China currently adopts a separate management pattern, the optimal choice is to set up a financial holdings company.

Commercial banks, securities firms and insurance companies operate independently within pure financial holding company frameworks, and are subject to different supervisory authorities.

This brings about mixed operation within the same organization, and is helpful to improving the supervision.

Cao Yuanzheng, director and chief economist of BOC International Holdings.

(China Daily January 6, 2003)