China News: New financial system for Guangdong?
Guangdong Province should consider establishing a multi-layer regional financial organization system.
So say some experts who believe such a system in one of the nation's most dynamic economic powerhouses would make the most of the huge non-governmental capital there and help private firms get easier access to capital.
So said Wang Zili, vice-governor of the People's Bank of China's (PBC) Guangzhou branch and a financial professor at the Shanghai-based Fudan University. He is also head of a research team authorized by the provincial government and organized by the PBC's Guangzhou branch to look at the province's non-governmental fund-raising problems.
The team has recently concluded its 18-month-long study. It found that the massive amounts of non-governmental cash in the province and the unfavourable conditions for private firms to raise funds or get access to financial credit mean a special regional financial organization system is vital, said Wang.
He said powerful and well-performing commercial banks and rural credit co-operatives in the Pearl River Delta region should be regrouped into a joint-stock commercial bank, which would be expected to be the head of any regional financial organization in Guangdong.
Wang added that rural credit co-operatives in less developed regions should take advantage of the opportunity; the central bank will be responsible for 50 per cent of bad assets and allow non-governmental investors to take them over and turn them into non-governmental financial organizations.
And insolvent rural credit co-operatives should be closed down, he said.
Wang also suggested that credit co-operatives in various forms should be organized, especially in regions where the economy is not very well developed.
For example, these would include co-operatives like those based in the same group, industry or community and those offering small enterprises stock-equity investment or exclusively offering credit.
He said the province is in a good position to set up a regional financial system; State-owned financial facilities have been disappearing from county-level markets, while local financial facilities in those markets have seen very slow growth in the past few years.
Credit loans on the part of State-owned banks accounted for 44.4 per cent of the county-level markets in the province at the end of last year, down 14.4 per cent from late 2000.
The team's study indicates that non-governmental capital was worth over US$1,200 billion yuan (US$147.97 billion) at the end of 2004, topping other provinces in the mainland.
And non-governmental funds raised were worth 140 billion yuan (US$17.26 billion) in late 2004, making up 6.41 per cent of the credit balance of the province at that time.
Township enterprises, private enterprises and self-employed businesses gained short-term credits of 148.22 billion yuan (US$18.28 billion) late last year, according to the research.
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