The mainland will unveil 'important breakthroughs' in the reform of its banking sector in November aimed at 'greatly accelerating' economic liberalisation, Vice-Premier Zhu Rongji says. In a keynote speech at a World Bank-IMF seminar yesterday, Mr Zhu also said the mainland's reforms were 'irreversible' and he was confident the country would maintain its present pattern of high economic growth and low inflation. 'Reform and opening up as required by China's own development have won whole-hearted support from the entire population and become irreversible,' said Mr Zhu, who last week was promoted to number three in the Chinese Communist Party Politburo. He said the economy was expected to grow annually by 8 per cent or more in the years to 2000 and by about 7 per cent annually for the first 10 years thereafter. The economy was expected to grow 10 per cent this year, after inflation fell to 1.4 per cent in the first eight months of the year. Mr Zhu, who is almost certain to become the country's premier in March next year, said Beijing was planning a national financial conference in November, focusing on guarding against financial risks and deepening banking reforms. 'Financial reforms are an essential part of China's open policy and economic reforms, and we will greatly accelerate them,' he said. The November conference would focus on how to strengthen the regulatory role of the central bank and transform state banks into commercial banks capable of making independent decisions. He did not elaborate, but analysts said a complete overhaul of the banking system was inevitable. They said Beijing had made its desire for further reform clear at this month's party congress, during which it claimed it would turn its ailing state sector around in three years. In a report released last week, China 2020, the World Bank said the state banks' net worth could be negative if mainland estimates that their non-performing assets were equivalent to about 20 per cent of their portfolios proved accurate. As reform of the banking and state sectors are closely intertwined, analysts said that if the mainland wanted to turn around the state sector in three years, it should also turn state banks into commercial banks within the same time frame. The head of the central People's Bank of China, Dai Xianglong, on Sunday said the mainland might require one trillion yuan (about HK$929.2 billion) to turn around the state sector. Mr Zhu also said Beijing was considering renewing the tax-free status of imports of capital equipment by foreign investors. It was originally abolished on April 1, last year. Mr Zhu declined to say when the incentive would be reintroduced.
