China's top financial regulators vowed Thursday to build a healthy banking system to fuel the economic boom, cracking down on reckless lending and finishing the "arduous'' task of clearing away debts owed by state companies.

The promises came as a deadline is near to open the banking industry to foreign competition in accordance with China's commitment to the World Trade Organization (WTO).

Regulators will tighten consumer credit after excessive lending last year boosted inflation, the head of the central bank and China's chief banking official said at a news conference on the sideline of the annual session of the National People's Congress.

The health of China's state-owned banks is critical for China as it nears the 2006 deadline for opening their market under its WTO obligations.

Regulators are pushing banks to become more commercially minded as they try to clear away loans made over the years by state companies afloat.

"We have to cultivate good credit culture within the banks,'' said Liu Mingkang, chairman of the China Banking Regulatory Commission created last year to oversee the industry overhaul.

Liu said Chinese state banks either recovered or wrote off unpaid loans worth 190 billion yuan (US$23 billion) last year. But he said that accounted for just over 5 percent of the total.

"Our fight against non-performing loans will be an arduous and long one,'' he said in the news conference at the Great Hall of the People in central Beijing.

Bank executives and state-owned borrowers will be held responsible for improper lending in order to minimize future bad loans, Liu said.

Regulators also will press banks to lend more to private and high-tech companies, Liu said. Until recently, despite the role of private companies in creating new jobs and wealth, banks have turned them away in favor of lending to state firms, which are considered better credit risks.

"I'm happy to report that lending to private enterprises and individuals is growing by 50 percent a year,'' he said.

However, Liu said his agency will step up scrutiny of car loans, credit cards and mortgages - a booming business in China's expanding consumer culture but a field he said was littered with "potential risks'' for inexperienced banks.

Liu said Beijing is moving ahead with plans to turn two of the government's biggest commercial banks into free-standing, profit-driven companies with private shareholders.

He expressed confidence in a plan that gave the Bank of China and the China Construction Bank an injection of US$45 billion in government money in January to replenish their capital and prepare them for a stock market debut.

"I see no necessity for future capital injections to these banks,'' he said.

Zhou Xiaochuan, governor of the , said the central bank will watch the country's lending more closely after a boom in landing last year led to a brief spurt of inflation.