A survey by Shanghai branch of the Industrial and Commercial Bank of China showed that 52 per cent of its relatively well-off telephone banking clients would accept service charges. Mainland commercial banks derive their earnings principally from deposits. The banks are worried that if they introduce account fees prematurely, customers may desert them in favour of foreign rivals when the banking sector opens to competition after WTO entry. Zhao Xijun, a professor with China Remin University's Financial Institute said ''deposits are the basis for the development of Chinese banks''. He told Beijing Youth Daily their priority should be to find stable clients, rather than chase short-term profit by introducing fees.
Banks claim that moves towards improved service are expensive and justify the introduction of fees.
Mainland commercial banks have traditionally charged few or no fees. Sun Zuoling, a vice general manager of China Everbright Bank, told the Beijing Youth Daily that fees are needed to maintain profits in the face of economic reform. Chen Jiguang, vice-president of the Beijing branch of the ICBC, told the paper that as banks prepare for a market economy, they should scrap any unprofitable policies. They could serve big clients and make money in bulk from the service fees,'' he said. The China Business Times reported that banks are diversifying into intermediary services, such as bill payment facilities.