China's four state-owned commercial banks welcomed a net drop of 2.1 percents in their non-performing loans in the first half of this year, largely a reflection of improved management in the country's banking sector.

Dai Xianglong, governor of the People's Bank of China, said at the central bank's working meeting on financial supervision on 14th that thanks to concerted efforts, China's banking sector maintained its stable development momentum.

He said the growth of the non-performing ratio of the four state-owned banks' loans began to slow in 2000, and in the last quarter of the year it enjoyed a net decrease. To date, the net decrease trend for non-performing loans has continued for nine months in succession.

He said that China's commercial banks have generally established systems of authorization and crediting, the separation of examination from loan granting, auditing and checking, and personnel exchange. Their sense of risk and profit has been clearly reinforced.

At present the risk of medium-sized and small financial institutions has been basically brought under control. The financial market order is being improved, and illegal financial activities have been effectively contained, he added.

He demanded further reinforcement of financial supervision, with the focus on lowering non-performing loans. This year and next year, the four state-owned commercial banks and policy-oriented banks should lower the ratio of their non-performing loans by two to three percents annually, he said.

(Shanghai Daily 07/15/2001)