Professor: Breaking up big bank monopoly highlight of China’s financial reform

(People’s Daily Online) 20:31, March 22, 2014

Chinese Bank of China

Beijing, March 22 (People’s Daily Online) — To break up big bank monopoly will be the highlight of China’s financial reform in 2014, professor Li Daokui told People’s Daily Online in Beijing, March 22, 2014.

Li Daokui, a professor with School of Economics and Management of Tsinghua University, has attended the “China Development Forum 2014” at the Diaoyutai State Guesthouse in Beijing.

China’s government work report 2014 has presented the concept of “comprehensive deepening reform”. As an expert in financial field, Li thinks that China’s financial reform is more mature now and has clear thought.

“Financial reform should go ahead. 2014 will most likely be a bumper year of financial reform and financial reform will be the highlight of this year’s reform,” Li said.

Li points out two key issues in China’s financial reform:

First, banking reform. China is set to fully liberalize its interest rate in a bid to further reform the financial sector. Banks shall raise deposit interest rates through appropriate competitions with each other. Another key issue of banking reform is to gradually break the monopoly of the big banks, and allow the emergence of a group of small banks. Banking reform is the highlight in financial reform.

Second, securitization of banking assets. To sell part of banking assets, especially housing loans, to the bond market in a reasonable manner. Banks can achieve benefits by doing so, including turn assets to cash, increase bank capital and improve the banks’ overall balance sheet, and improve profits.

Li stressed that “If the securitization of banking assets can be achieved, the bank shares, accounting for 20 percent of the entire stock market, will go up, which will further push forward the whole stock market. The problem in the stock market, at least in the short term, is also the bank’s problem.”

The article is edited and translated from《李稻葵:打破大银行垄断成为2014金融改革重头戏》, source:

(Editor:intern1、Yao Chun)

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