SHANGHAI—Chinese Premier Wen Jiabao told a national audience on Tuesday that China’s state-controlled banks are a “monopoly” that must be broken, in an unusually blunt appeal for a shake-up of the creaky financial system of the world’s No. 2 economy.
Mr. Wen’s declaration on a national radio program on Tuesday represents an 11-hour push for an overhaul by China’s top economic official, who formally came into office in 2003 with a reputation as a reformer but has acknowledged publicly his regrets that he didn’t go far enough. Mr. Wen is expected to step down as premier in a once-a-decade leadership change that begins late this year.In an evening broadcast on state-run China National Radio, Mr. Wen told an audience of business leaders in the export-oriented province of Fujian 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 according to the transcript of the program posted on the broadcaster’s website. “To break the monopoly we must allow private capital to flow into the finance sector.”
The push is part of a broader set of issues over China’s future growth. The country’s economic expansion is set to slow in coming years after racing ahead at a torrid pace over the past decade, raising questions over whether it can switch from a model based on exports and investment to one that relies more on a rising consumer culture.
That has led to a nationwide conversation over China’s tight grip on its financial system, which favors big state-owned firms but has been criticized by economists and even some reformers in China.
To realize the economic transformation, “private companies should be encouraged to get into the financial-services industry,” said Fang Xinghai, director-general of Shanghai Municipal Financial Services Office and a former World Bank economist, in an interview at China’s Boao Forum for Asia this week.