These new banks will serve collectives, private business and other small and medium-size companies which are difficult to obtain credit from major state banks. China has 16 domestic banks and plans to turn four major banks, Industrial and Commercial Bank, Bank of China, Agricultural Bank of China and People's Construction Bank, into commercial banks by 2000. Twenty percent of the loans of the four banks are overdue and 3 percent are dead and unrepayable. Citing the sharp rise in capital expenditure for international bond issues, the China Development Bank has suspended plans for all new foreign financing until conditions on international capital markets improve. This, however, symbolizes the measure that the China's State Council, the cabinet, is taking facing the influx of foreign funds last year forced the central bank to increase the domestic money supply.
China is also in a peak year for payment of foreign debts.
The State Council issued a notice at the beginning of this year prohibiting regional governments from overstepping their authority by incurring foreign debts. It also suspended related international credit ratings. Meanwhile, the State Planning Commission and related departments are currently drafting regulations on obtaining funds through foreign markets, foreign loans with a Chinese guarantor and international capital leasing. According to a quarterly survey by the People's Bank of China, as quoted by the Reuters, 18.2 percent of depositors, 4.8 percentage more than the January-March survey, would invest in securities rather than saving money into banks. Still, 59.8 percent of the surveyed said they would keep money in banks.