Foreign-invested domestic banks will not change their ownership structure or business scope if the proportion of foreign capital is kept under 25 percent, said the official.

Recently, foreign banks have been allowed to apply directly to CBRC to set up branches and representative offices in China. Formerly, their applications had to be submitted first to local regulatory authorities.

CBRC has meanwhile given permission to these local authorities to verify the qualifications of new branch heads or regional chief representatives of foreign banks.

The official said that foreign banks not only bring capital, technologies and new products to China, but also demonstrate to domestic state-owned commercial banks the most advanced operations and management systems.

"Their entry into China has intensified pressure on state-owned banks, spurring them to deepen reforms," he said.

CBRC has pledged gradually to lift restrictions on foreign banks in terms of clients as well as in business and region, in line with the timetable of China's commitment to the World Trade Organization. The commission will promote the opening of the banking industry for a fair and reciprocal environment between domestic and foreign banks.

By March 2004, 62 overseas banks from 19 countries had established 195 branches on the mainland. Eighty-eight have been approved to conduct RMB business. Foreign banks have also set up 213 representative offices.

The total assets of foreign-funded banks have reached US$53.6 billion, accounting for about 1.6 percent of all China's banking organizations.

The RMB business of overseas banks is expanding rapidly. Total RMB capital has risen in the double digits for several years and is now at 78.5 billion yuan (US$9.5 billion).

(Xinhua News Agency May 31, 2004)