find a clear answer in corporate governance structure and the company law. centralized management will not be suitable in china, since we have a sizable presence of three - level state ownership. great britain once ruled over india, australia and some other places. a story was told that, the british government delivered heating radiators to schools in colonial india where electronic fans were actually needed, for officials in london thought india might be as cold a place. for china with a complex and large capital system, we could not imagine that a highly centralized approach could work without a layered management mechanism featuring clear responsibilities and adequate capital operational capacities. under such circumstances, owner - agent relationship of state - owned capitals thus became crucial. since chinese people are the real owners in essence, how could we realize such ownership? to whom to consign responsibilities? through what kind of organizational structures, corporate governance structure, checks and balances, including competitive and incentive mechanism? establishing holding company looks like a good solution. different holding companies may compare their performances, thus resulting in different incentives. holding companies could have diverse capital structures and go public to improve efficiencies through public monitor. from this point of view, the establishment of holding companies is an inevitable choice. as an integral part of soe reforms, the reform of state - owned commercial banks adopted the holding company model after studying international and chinese enterprises ’ reform experiences. of course, it has to be tested in practice. finally, how to pay dividends should be decided by the board of directors and the shareholders ’ meeting. the board of directors decides whether and how much to pay, and all shareholders rather part of shareholders should be paid. in summary, who should be paid dividends depends on a clear property right structure. there is no need to complicate this matter. 5. conclusions in my personal view, to clarify property right and improve corporate governance, we should make efforts to reach consensus through discussion of dividends distribution by state - owned enterprises and investment returns of state owned shares in enterprises with mixed ownerships. in line with such a spirit, we have carefully studied and discussed property right reform for bank of china, china construction bank and the industrial and commercial bank of china, hoping to avoid the co - existence of both listed companies and the legacy companies like before. all three conducted complete financial restructuring. among them, china construction bank has less than 10 percent of capital invested by the china jianyin investment co. ltd. which is responsible for providing trust loans on behalf

will also be mutually independent. the hong kong monetary authority will be accountable solely to the hong kong government. the people ’ s bank of china will not take the place of the hong kong monetary authority and will not set up any office there. as hong kong and the mainland develop increasingly close economic ties in both trade and investment, close co - operation between the two monetary authorities becomes even more important. the two monetary authorities must, therefore, strengthen further the present sound co - operation of central banking functions, including monetary management, banking supervision and the development of the financial infrastructure. the third principle concerns co - operation in prudential supervision. according to the basic law, the hong kong government will continue to supervise financial institutions in hong kong, including financial institutions from the mainland. supervision will continue to be undertaken in accordance with international rules and practices. notwithstanding different business practices in the mainland and hong kong, we have reached consensus on licensing procedures and supervision of each other ’ s financial institutions. it has been agreed that : financial institutions based in the mainland and hong kong setting up offices in each other ’ s territory shall be approved on the same basis as foreign financial institutions. the mainland offices of hong kong - based financial institutions shall continue to enjoy the same preferential treatment in the mainland as other foreign financial institutions. mainland financial institutions in hong kong shall not enjoy any privileges. they shall abide by the law of hong kong and be regulated by the relevant supervisory authorities in hong kong. this arm ’ s length treatment will certainly help to underscore the implementation of the “ one country, two systems ” principle. the fourth principle is that the people ’ s bank of china will support the currency stability of hong kong. on behalf of the pboc, i have early this year signed a bilateral agreement with the hkma on the repurchase of us treasury paper. we are prepared to offer liquidity support to the hkma for the purpose of stabilising the exchange rate of the hong kong dollar. we also stand ready to use our foreign reserves to support the hong kong dollar, if necessary. however, i must point out that under no circumstances will china draw on or resort to hong kong ’ s exchange fund or other assets in any way and for any reason. i mentioned earlier that the basic law states that the exchange fund shall be managed and controlled by the hong kong government. it is also stated that the financial revenues of the hong kong special administrative region shall be used exclusively for its own purposes.