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China's Financial Sector Develops Smoothly: UN Report
China has successfully solved some of its financial problems, spurring healthy development of the sector, according to a UN report.
The report on the Economic and Social Survey of Asia and the Pacific 2000 was released here today by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
Although there is a significant problem of non-performing loans in China, the institution of reforms of the State-owned enterprises (SOEs) and setting up of asset management companies for major State banks have prevented the severe credit crunch experienced by a number of other economies in the Asia-Pacific region, the report said, adding that low interest rates have assisted in the process.
Given the relatively low ratio of public debt to gross domestic product (GDP), resolution of the non-performing loan problem and recapitalization of State-owned banks should not pose a major fiscal burden, the report noted.
Supervision and regulation of the financial sector has been considerably tightened during the last two or three years. However, durable solution of the non-performing loan problem affecting banks is not possible without reform of the SOEs, the report pointed out.
A total of seven Chinese financial institutions have become members of the Institute of International Finance (IIF), including Bank of China, Bank of Communications, China Construction Bank, China Development Bank, China Everbright Holdings Co., Ltd., China Merchants Bank and China Minsheng Banking Corporation
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