Chinese Premier calls for break up of state-run banks

THE Chinese Premier, Wen Jiabao, said the nation's biggest state-run banks had too much power and ought to be broken up because they earned far too much money.

THE Chinese Premier, Wen Jiabao, said the nation's biggest state-run banks had too much power and ought to be broken up because they earned far too much money.

The remarks, delivered during a national radio address while the Prime Minister was travelling in southern China, were unusually bold and appear to be a direct challenge to others in the nation's Communist Party leadership to speed up reforms of the financial system.

According to China National Radio, Mr Wen said: "Frankly, our banks make profits far too easily. Why? Because a small number of major banks occupy a monopoly position, meaning one can only go to them for loans and capital ... That's why right now, as we're dealing with the issue of getting private capital into the finance sector, essentially, that means we have to break up their monopoly."

Mr Wen, who is expected to step down later this year as part of a once-in-a-decade leadership change, has been striking an increasingly vocal tone in recent months about political and economic change, and suggesting that vested interests in the party leadership are stubbornly protecting their hold on power and derailing his reform efforts.

Whether he has the political influence to force changes in the banking system is unclear. But while he is the nation's top economic planner, many analysts say the Communist Party's consensus method of ruling limits his ability to push through his own policies.

That is perhaps why Mr Wen has become willing to signal his frustration with the Communist Party about some key areas of politics and economics.

The state's control over the economy has been a chief point of contention among policymakers, with some pressing for greater state control and others favouring more aid to private companies.

Analysts think various power bases in the party are now battling it out to see who will gain a majority of nine seats on the all-powerful Politburo Standing Committee later this year.

Because he is nearing retirement, the 69-year-old Mr Wen might be trying to make a final reform push in his final months in office, analysts say, but also moving to challenge his opponents on important issues.

Related Articles