China will not only modify its banking system by macro management, but also promote banking reform at the micro level, said Zhou Xiaochuan, governor of the People's Bank of China (PBOC), China's central bank.
Zhou made the remark when addressing the annual meeting of the China Development Forum Sunday in Beijing.
He said much of China's financial reform, especially the reform of its banking system, is at a micro level, adding that the "apparently uncomplicated" reform had not performed well enough so far.
Zhou noted that the priority of the micro reform of China's banking system was to achieve a better balance between the policy administration and commercial service, which is, in other words, to reduce the proportion of the policy administration upon China's banking business.
Zhou also pointed out that the administrative pricing derived from China's decades-old transition from a planned economy to a market economy still prevails in many banks.
In many cases, the interest rates and financial payment has failed to represent the actual cost and risk of China's banks, Zhou added.
The market pricing system needs to be fully established within the banking system, Zhou urged.
Zhou also said the central bank would grant more self-determining rights, such as employment and reward policy-making, to financial institutions, and restrictions on market access will be lifted soon.
(People's Daily March 24, 2003)
