The argument about the non-state-owned banks started in the end of last year. At a symposium held in Beijing University in early November 2000, four entrepreneurs from the non-state-owned enterprises from Zhejiang, Liaoning, Jiangsu and Shaanxi Provinces took with them the preparation materials for the non-state-owned banks and asked experts from the Great Wall Finance Institute to offer consultation on the feasibility of the non-state-owned banks.

It was then rumored that the so-called four non-state-owned enterprises would launch the first experimental non-government banks. The topic of these banks was made hot in the financial reports of any kind.

It seems to be forgotten that the non-state-owned banks are nothing new in China. According to Nan Jingming, if the definition of "non-state-owned" is considered opposite to that of "state-owned", this kind of banks have long existed in China. Good cases in point are Minsheng Banking Corporation and some city credit cooperatives, including Tailong City Credit Cooperative in Taizhou City, Zhejiang Province.

As early as in the year 1995, The People's Bank of China stated that the banking system in China was based on the state-owned banks, and at the same time, with state shareholders and a small number of individual shareholders, some commercial banks were encouraged to develop, but private banks are not permitted in any case. Minsheng Bank is a good sample of the commercial banks that are based on the shareholding of private enterprises.

The main characteristic of the abounding rural credit cooperatives is that the associators buy the shares and regulate the cooperatives openly, and in return, the cooperatives offer financial services for them. According to the Management Regulations of Rural Credit Cooperatives, the most shareholding proportion of an individual associator should be less than 2 percent of the shareholding equity; furthermore, each associator is required to buy the shares in cash.

As a matter of fact, the non-state-owned financial institutions have long existed opposed to the state-owned ones. There is another understanding of "non-state-owned", advanced Nan Jingming, which belongs to the private. According to the Law of Commercial Banks, private banks are prohibited in China, which is reiterated by the central bank. Dai Xianglong, the president of the central bank expressed in public last year that private banks were forbidden in China except individual shareholding of the banks.

Private banks are permitted in the western countries, said Nan jingming, but their definition of the private banks is much different from that in China. In the western countries, any bank with less than 7 shareholders can be cognized as a private bank, such as the famous Citibank and Bank of Switzerland. "If the west criteria were adopted in China, the Industrial and Commercial Bank, the Agricultural Bank, Bank of China and the Construction Bank of China would be defined as private banks, for the shareholders of these 4 banks are less than 7,"commented Nan Jingming.

The People's Bank of China once explained the causes why private banks are not permitted. One of the reasons is that the scale of the private capital is not big enough to operate a bank. "All the commercial banks should be under the regulation of the market," said Nan Jingming. One of the listed banks, Minsheng Bank has been under the supervision of the public. And most of the unlisted banks should be regulated by the departments in charge of them. However, the commercial banks should offer financial support to enterprises without paying too much attention to their ownership. "The commercial banks are supposed to support the most promising enterprises, no matter what ownership they are from."

(People's Daily 01/10/01)