China announced that it is ready to inject as much as US$100 billion into its banking sector to clean up bad debts of its major banks, adding that the banks would be able to solicit foreign investment.
Liu Mingkang, chairman of the China Banking Regulatory Commission (CBRC), was quoted in Chinese media as saying the government will convert some state banks into public shareholding companies to facilitate the introduction of foreign investment.
Liu said that once the top four state banks have the "right conditions" in place for restructuring or a share issue – likely requiring a reduction of bad loan ratios to about 10 percent – the government will "especially usher in foreign companies as strategic investors."
The CBRC aims to reduce the nonperforming loan ratio of China's top banks to 15 percent by 2005. The government says that the current ratio for the banks is around 23 percent.