“Chinese Premier Blasts Banks”

Are China’s banks too big to be broken up?:

Chinese Premier Blasts Banks, by Dinny McMahon, Lingling Wei, and Andrew Galbraith, WSJ: Chinese Premier Wen Jiabao told a national audience on Tuesday that China’s state-controlled banks are a “monopoly” that must be broken up…

In an evening broadcast on state-run China National Radio, Mr. Wen told an audience of business leaders that China’s tightly controlled banking system needs to change. “Let me be frank. Our banks earn profit too easily. Why? Because a small number of large banks have a monopoly,” said Mr. Wen… “To break the monopoly, we must allow private capital to flow into the finance sector.” …

Mr. Wen’s push is part of a broader set of issues over China’s growth, and came on the same day that Beijing unveiled programs intended to support the development of the country’s capital markets and to spread international use of the yuan. Among them, China’s security regulator said it would more than triple the amount that foreigners would be allowed to invest in China’s heavily restricted financial markets to $80 billion. …

Mr. Wen’s remarks, in the export-oriented province of Fujian, are further indication that long-delayed economic reform is now at least a topic for public debate. …

The major question is whether increasing rhetoric and new initiatives toward economic revisions will lead to broader reform. Prior efforts have faltered amid Beijing’s drive to keep a tight rein on the economy and opposition from interest groups. …

via Economist’s View: “Chinese Premier Blasts Banks”.