Until then 'advice' in an environment in which the currency is pegged and the capital account closed, would have to be largely restricted to recommending investments in local equities, bonds, property, or bank deposits - hardly the sort of service the rich are likely to pay foreign newcomers for, and not one that will generate fee incomes large enough to defray the costs of setting up such a business.

So when will regulations change and allow those mainland private banking start-ups to transform themselves from cash-burners into revenue contributors for their parent groups in New York and London?

Not any time soon. And certainly not until policymakers are able to risk floating the yuan and throwing open the capital account without risking a stampede of savings out of China in search of superior returns and safer havens offshore.

Which is where the bad arithmetic enters the policy equation.

Domestic interest rates were last raised by the People's Bank of China in October 2004 - the first adjustment in more than nine years. One-year yuan deposit rates were then raised by a modest 27 basis points to 2.25 per cent, which is where they remain today, going on 18 months later - compared to a US dollar one-year deposit rate that has meanwhile marched on to 5.3 per cent.

That mismatch presents just one of the many gaps currently on offer between domestic and foreign investment assets into which local savings would flow if they were free to do so.

But were the super-cautious mandarins who have in their hands all the major policy levers to maintain this glacial rate of change, closing the gap between domestic and offshore interest rates alone would take 112 years.

Clearly AIG Private Bank, which became the first foreign private bank to open an office in Shanghai under restricted licence conditions in September last year, and Citigroup, which followed last month, are not expecting to be sitting on their hands or 'gathering intelligence' for that long.

Instead, they have their sights on the 'good arithmetic' and will be itching to advise a marketplace which according to one industry study, said Citigroup, 'accounted for US$910 billion in assets under management (aum) among the affluent in 2004 - defined as those individuals with a minimum US$100,000 in net worth'.

More than half of those assets, or US$530 billion-worth, were held by 'millionaire households' (with aum of at least US$1 million), of which there are now more than 300,000 in China. Looking ahead, added Citigroup, total aum in China was expected to grow to $1.73 trillion by 2009 at a compound annual growth rate of nearly 14 per cent a year.

All that lies in the future. In the meantime, along with the most astute of China watchers, the private bankers who have already landed will be parsing the deeds, rather than the words, coming out of Beijing.

In prospect on this front is a further modest adjustment of administered interest rates and a monetary tightening measure to be delivered via another small rise in the level of reserves that the banking sector is required to hold. This will apply a brake to lending growth that saw 700 billion worth of loans advanced in the first two months of the year - almost 30 per cent of the full-year target set by the central bank.

Who knows, but the measures may just be timed to coincide with next week's visit to Washington by President Hu Jintao (left), who will arrive to a cacophony of protests over China's fixed currency regime and its closed capital account, and amid calls for import tariffs that could have damaging consequences for the mainland's export sector.

Watch this space. And be prepared, when the next small step on the long march to reform does come, for the more excitable commentators who will interpret it as heralding a weakening of China's resolve in the face of all of those threats, and a likely speedy end to its fixed-currency regime and close capital account.

Don't be fooled by such hype. For one thing, Chinese policymakers are focused - to the exclusion of almost all other targets - on sustaining economic growth at a level that will generate jobs in sufficient numbers to contain any possible social unrest. That objective would be derailed by any sharp adjustment in interest rates.

For another, the mainland's banking sector must be prepared for the day when it will have to compete with the alternatives recommended by private bankers to retain its customer deposits. The alternative would be an exodus of deposits which would trigger a systemic collapse of the finance industry.

Much attention - and many billions of yuan - has already been devoted to this preparation, but by most accounts - the final piece of arithmetic - the banking sector will not be financially secure enough to weather changes in the present currency and capital account regime for at least another three years.