The State Council, China's cabinet, opened Friday its third national financial work conference which will formulate plans crucial to the country's financial system over the coming few years.

Analysts said the meeting comes at a time when China is facing some problems: a record high trade surplus of US$177.47 billion in 2006, huge foreign exchange reserves that exceed US$1 trillion, stagnant domestic consumption and the possibility of a slowdown in the world economy.

The previous two meetings, held in 1997 and 2002, led to significant policy changes.

The first national financial work conference was held in 1997, the year a financial crisis swept Southeast Asia. China reacted by adopting proactive fiscal and financial policies, setting up the Insurance Regulatory Commission and instituting reforms of the "Big Four" banks: the Bank of China, the China Construction Bank, the Industrial and Commercial Bank of China and the Agricultural Bank of China.

The second national financial work conference, held in 2002, saw the establishment of the Banking Regulatory Commission, and the adoption of "prudent" fiscal and financial policies.

(Xinhua News Agency January 19, 2007)