After three-month arguments and demonstrations, the
People's Bank of China
(PBOC), the nation's central bank, has approved a financial reform
scheme for Zhejiang Province's Wenzhou City.
Wenzhou City will become a testing ground for China's next round of
financial reforms and will be responsible for providing experiences
on new national financial reform mechanisms.
It
is said that central bank governor Dai Xianglong made the decision
after an inspection of Wenzhou City in August. In 1987, Wenzhou was
the first city to carry out interest rate reforms. This year, the
city has been chosen to pilot the introduction of floating interest
rates in rural credit cooperatives.
The local media, quoting the words of a PBOC official, attribute
the approval to the rapidly growing local economy. Average Personal
Disposable Income in the city has reached 13,200 yuan (US$1,594)
per year. Many products made in Wenzhou, mainly by private
enterprises, have secured a large share of the domestic market. A
large-scale economic zone focusing on light industry is taking
shape.
Wenzhou's financial industry is also maintaining a rapid rate of
growth. By the end of November, RMB saving deposits reached 138.39
billion yuan (US$16.7 billion), while loans were at 90.02 billion
yuan (US$10.9 billion). The ratio of non-performing assets is below
5 percent, much better than the Zhejiang provincial average.
Currently, eight out of ten national commercial banks have set up
branches in Wenzhou, and the other two, China Everbright Bank and
Minsheng Bank, are making preparations.
Due to the strong risks associated with resistance to change,
Wenzhou is becoming a popular experimental ground for credit and
loan innovations, and interest rate liberalization.
The new financial reform includes: establishing a small-loans
market; innovating sound financial governance mechanisms;
restructuring rural credit cooperatives; strengthening the support
of "Triple Agricultures"; further implementing interest rate
reforms; setting up guarantor firms to support Wenzhou's small and
medium-sized enterprises; and accelerating financial product and
service innovations.
(China.org.cn by Tang Fuchun, December 27, 2002)