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China to put foreign, local banks on even footing

SHANGHAI: China will gradually unify supervision standards for domestic and foreign banks in order to level the playing field for competition, the Securities Times on Saturday quoted a senior central bank official as saying.

"Chinese and foreign banks are competing unequally in China," Tang Shuangning, director of the bank supervisory department of the People's Bank of China, told a seminar.

"We must put both sides under unified supervisory standards to wipe out inequality," he said.

Tang said the central bank would begin treating foreign banks like local ones and eliminate differences in interest rates, tax rates and fee charges between both sides. But he gave no timetable.

Foreign banks are currently able to conduct only limited business in China, but Chinese banks have complained that their foreign competitors enjoy tax breaks and other benefits not available to domestic institutions.

The country's pending entry into the World Trade Organisation will remove some of the barriers for foreign banks. Under an agreement hammered out with the United States in November, China has committed to full market access in five years for U.S. banks.

Foreign banks will be able to conduct local currency business with Chinese enterprises starting two years after China's WTO accession, and will be able to conduct yuan business with Chinese individuals from five years after.-Reuters