China's debt-ridden state-owned commercial banks should open up to
private investment to attract capital and help clear up the growing
number of non-performing loans on their books, advised several
delegates attending seminars yesterday related to the 35th annual
meeting of Asian Development Bank.
Delegates attending the event in Shanghai said the bad-loan problem
must be solved to provide a spur to China's economic
development.
Officials from the ADB
Institute, a research arm of the bank, said that China's four
biggest state-owned commercial banks -- the Industrial and Commercial
Bank of China, the Bank of
China, China
Construction Bank and the
Agricultural Bank of China -- shouldn't simply transfer their
bad debt to asset management companies.
"There are few, if any, examples of countries with a similar size
of non-performing loans having successfully grown out of their
problems," said Masaru Yoshitomi, dean of the ADB Institute. "A
large stock of NPLs makes banks reluctant to lend, even to viable
firms, causing a credit crunch and economic stagnation."
It
is estimated that Chinese banks have about 3 trillion yuan
(US$361.5 billion) in bad loans on their books, which is equal to
25 percent of total loans.
"In terms of distribution among banks, the big four banks have
about 60 percent of the total," said Li-Gang Liu, a research fellow
with the ADB Institute.
The big four banks' preferred solution of transferring bad loans to
asset management companies isn't working.
Take China Construction Bank for example. Its asset management
company has only disposed of about 10 percent of the bad loans
absorbed from the bank since the late 1990s.
Instead, banks should diversify their ownership, said ADB Institute
officials.
"The suggestion is based on the fact that there are many mature
private enterprises and a huge sum of individual deposits on
China's mainland," said Yoshitomi.
Yesterday also saw Chinese Finance Minister Xiang Huaicheng meet
ADB President Tadao Chino.
"China has done much preparatory work for the annual meeting, and
is confident it will be successful," said Xiang.
Chino expressed his appreciation and thanks for the Chinese
government's outstanding contributions to the meeting. The world
will learn still more about China's achievements through this
meeting, he added.
Today, eight top Chinese officials will deliver speeches and lead
an in-depth discussion on China's economic and social
development.
The week's main event, the 35th annual meeting of the ADB, begins
tomorrow and runs through Sunday. Delegates will discuss the
economic situation in the Asia-Pacific region, aid for the
reconstruction of Afghanistan and continued efforts to alleviate
poverty.
This is the second time China has hosted an ADB annual meeting. In
1989, Beijing held an ADB meeting.
(Eastday.com May 9,
2002)