Chinese Premier calls for end to bank monopoly

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The Independent Online

China's Premier Wen Jiabao has taken a leaf out of Vince Cable's book, calling for the monopoly of state-owned banks in the world's second largest economy to be broken.

"Frankly, our banks make profits far too easily. Why? Because a small number of major banks occupy a monopoly position, meaning one can only go to them for loans and capital," the country's second highest ranking politician said, according to China National Radio. "That's why right now, as we're dealing with the issue of getting private capital into the finance sector, essentially, that means we have to break up their monopoly."

There are some signs that reform is on the way. Last week the government approved reforms in the city of Wenzhou designed to encourage private investment in local banks. However, China's leadership is set to change in October, when a new Communist Party general secretary and a new premier are due to be appointed. This has prompted some analysts to question whether the financial reforms, which threaten powerful vested interests, will be continued.

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