China will allow the creation of up to five privately financed banks this year to support economic growth by gradually opening the state-run industry, the country's banking regulator says.
Analysts including the World Bank say an overhaul of Chinese banks that lend little to entrepreneurs is urgently needed to achieve the ruling Communist Party's goals of making the economy more productive.
The China Banking Regulatory Commission said in a statement on Monday that it would enlarge the role of private capital in banking. It said that would include a closely supervised 'pilot project' to allow creation of three to five privately financed banks. The moves are aimed at promoting 'modernisation of governance,' the agency said. It gave no details of who would be allowed to set up a bank or in what lines of business they can compete. Communist leaders are trying to inject more competition into China's economy while retaining control of key industries. They also are trying to reduce reliance on trade and investment to drive growth by encouraging more domestic consumption.
China's economic growth tumbled to a two-decade low of 7.5 per cent in the second quarter of last year, adding to the urgency of pushing through reforms.
Analysts including the World Bank say an overhaul of Chinese banks that lend little to entrepreneurs is urgently needed to achieve the ruling Communist Party's goals of making the economy more productive.
The China Banking Regulatory Commission said in a statement on Monday that it would enlarge the role of private capital in banking. It said that would include a closely supervised 'pilot project' to allow creation of three to five privately financed banks. The moves are aimed at promoting 'modernisation of governance,' the agency said. It gave no details of who would be allowed to set up a bank or in what lines of business they can compete. Communist leaders are trying to inject more competition into China's economy while retaining control of key industries. They also are trying to reduce reliance on trade and investment to drive growth by encouraging more domestic consumption.
China's economic growth tumbled to a two-decade low of 7.5 per cent in the second quarter of last year, adding to the urgency of pushing through reforms.