Chinese Premier Wen Jiabao said in Beijing Sunday that in recent years, the state-owned commercial banks have made some progress, but problems are numerous.

When answering a question from a journalist of the South China Morning Post, Wen said the biggest problem existing in China's banking system is that the ratio of non-performing loans (NPL) is high, which has reached nearly two trillion yuan, accounting for 20 percent of the total.

He also said that nowadays the state-owned banks do not perform very well. The fundamental reasons lie in institution and mechanism.

The central government has made a decisive move on adopting a share-holding reform in Bank of China (BOC) and China Construction Bank (CCB) and has injected US$45 billion of capital in the banks. The measures have received generally positive response from home and abroad.

"I want to make clear that the banking reform we took this time is to really push our state-owned commercial banks to be the real modern commercial banks," he pointed out.

He said the leadership of the two banks must take measures to ensure the safety of the capitals injected by the state, at the same time shoulder the responsibility of lowering the NPL ratio.

He also said the management and the competence of the staff inside the state-owned banks is key to the success of the banking reform.

"This is our last-ditch battle. We could not afford any failure. We must take decisive measures to ensure a successful reform," he stressed. 

(Xinhua News Agency March 14, 2004)