China’s long-serving central bank governor Zhou Xiaochuan says the country must open its financial sector wider to foreign competition if it is to avert a crisis. “If we want to avoid a financial crisis, we must ensure the health of our financial institutions and we should not tolerate high leverage, insufficient capital or high non-performing loans,” Zhou told the Lujiazui Forum, an annual gathering of regulators, bankers and academics, in Shanghai on Tuesday. “Protection leads to laziness… and rent-seeking.” He said it was wrong to shelter the financial system from open market competition as it would lead to “unhealthy and unstable” institutions. That was a lesson to be learnt from the Asian financial crisis in the late 1990s, he added. Sixteen years after China joined the World Trade Organisation, promising to open its financial sector, foreign banks account for about 2% of the mainland market, according to the South China Morning Post.