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Policy Lenders to Go Commercial
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China Development Bank will take the lead in developing commercial banking services under reforms that will see the country's three policy banks become more market-oriented.

The three banks - China Development Bank, the Export and Import Bank of China and the Agricultural Development Bank of China - will carry out their reforms under different policies suited to their individual operational conditions, said Premier Wen Jiabao at the National Financial Work Conference.

China Development Bank will become the first of the three policy banks to start commercial operations. The bank will focus on middle- and long-term financial services, Wen said.

The three policy banks were established in 1994, when the government decided to promote the reform of the Big Four State-owned commercial banks and split policy lending from their operations.

The policy banks have played a vital role in supporting the country's large-scale infrastructure projects, mechanical and electrical equipment sectors and rural development.

But, "it is imperative to call for the transformation of the policy banking system since the traditional function of policy banks is increasingly questionable within the context of a market economy," said Han Meng, an expert from the Chinese Academy of Social Sciences.

Market insiders predicted that as a commercial bank, China Development Bank will have the best asset quality among all the country's banks.

Statistics from the bank show that by the end of last year, it had managed assets worth 3.1 trillion yuan.

(China Daily January 22, 2007)

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