Chinanews, Beijing, Sept. 15 – Vice director of the Policy Research Office of the CPC Central Committee Zhen Xinli said yesterday that the entry of foreign financial institutions into China would bring more risks to the Chinese financial market. As a result, much capital will flow outside China and the profit of Chinese real economy would decrease substantially. In addition, these foreign financial institutions would rival domestic banks in some of the core business areas and might take away some of the big customers. He urged state-owned commercial banks to keep the dominant position in domestic market.

 

Zheng encouraged domestic small- and medium-size enterprises to go listing abroad. He said that China should also attract Chinese enterprises which had already gone public in overseas stock market to issue A shares in domestic securities market, so that Chinese people could also benefit from their fruitful development. When time is appropriate, China should allow foreign enterprises to go listing in domestic stock markets, so as to make Chinese capital market more prosperous.

 

Compared with their foreign counterparts, domestic financial institutions do not have enough managing experiences, Zheng said. If foreign financial bodies enter into the Chinese market, they would create a big virtual economy, reduce the profit of the real economy, and benefit from the growing Chinese economy without taking any risks. In addition, foreign financial banks would compete with Chinese banks for big customers and some core services including credit card service, housing loan release, mortgage-back securities, money managing services, and private bank services. If foreign financial institutions took away most of the big customers and were in a monopoly position in core business services, it would do no good for the long development of domestic banks, he noted.