A senior central bank official said China should step up the pace of the opening of the banking sector to both foreign banks and domestic private investors.
Some of the smaller commercial banks are looking for private investors, and the Big Four State banks also need to start bringing in qualified strategic investors, said Yi Gang, deputy secretary-general of the Monetary Policy Committee of the People's Bank of China, at a seminar organized by the China Centre for Economic Research at Peking University over the weekend.
Yi said China should further open the banking industry to domestic investors, who see foreigners getting investment advantages in the sector as China puts its World Trade Organization promises into practice.
The non-State sector has made essential contributions to China's economic growth and has provided many employment opportunities, yet they are largely denied access to the financial sector and that should be changed, Yi said.
Yi said he was cautiously optimistic about China's economic prospects. He predicted China's economic growth rate could reach 7.5 per cent this year and said he was hopeful that the consumer price index, a barometer for inflation, would be pulled out of negative territory.
China has been facing lingering deflationary pressure since the second half of last year, with all three major price indices negative at present.
Of course, China still has to tackle problems of slow rural income growth, urban unemployment, social security and the reform of State-owned enterprises, said Yi.
But domestic demand should be boosted by the continuing fiscal expansion. And fixed asset investment should be fuelled by the State plans to issue another 150 billion yuan (US$18 billion) in government bonds this year, said Yi.
He said China's foreign trade would also grow by 10 per cent in 2002.
Recovery of the US economy would improve China's exports in the second half of the year.
Martin Feldstein, president of the US National Bureau of Economic Research and a professor at Harvard University, said that the US economy is facing a very strong recovery and should grow by 3.5 to 4 per cent in the second half of the year.
That will be based on increasing consumer spending and strong productivity growth.
Feldstein said he has "real confidence" in the Chinese Government's ability to deal with current problems and its input of resources into the agricultural sector. He rebutted the view of a possible economic breakdown in China seen by some Western media.
(China Daily July 2, 2002)