Commented on the issue yesterday in the ministry's regular press briefing, Kong said there's no need to doubt Chinese mainland's economic situation, including the banking supervision system.

"The reform on banking supervision system has been strengthened as China's mainland deepens its economic reform," he said, "The interests of overseas investors will be better protected and the mainland's investment environment will become better and better."

Also yesterday, Hong Kong's Monetary Authority said it has launched a probe into loans made by a major Chinese state bank to Zhou, also known as Chau Chingngai in Hong Kong.

A spokesman for the monetary authority, speaking on condition of anonymity, said the probe will focus on Bank of China (Hong Kong)'s loan approval procedures, internal control system and the asset quality of the loans to the 42-year-old businessman.

The investigation could take about three months, the spokesman told Dow Jones Newswires.

The review comes amid a widening scandal involving Zhou's business empire, which has been shaken by suspected fraud, stock manipulation and other illegalities.

The central government has been tightening controls over financial industries.

Hong Kong newspapers have reported that Zhou is under surveillance in Shanghai. His wife and business partner, Mo Yuk-ping, was recently interrogated by Hong Kong's anti-graft agency.

The Bank of China's Hong Kong-listed unit confirmed last week that it was looking into loans made during the tenure of its former Chief Executive, Liu Jinbao, who was recalled to Beijing last month without explanation.

BOC (Hong Kong) also said it had asked New Nongkai Global Investments Ltd, a company fully owned by Zhou, to repay HK$740 million (US$94.9 million) outstanding from a HK$1.77 billion loan granted in June 2002.

The loan was made to finance Zhou's purchase of a controlling stake in Hong Kong-listed Shanghai Land Holdings, the bank said, adding that it had obtained legal approval to take over New Nongkai's assets.

However, the bank did not confirm that the loans granted under Liu which were under investigation were the same outstanding loans made to New Nongkai Global.

(eastday.com June 11, 2003)