role in supporting the regional economic development. on this account, we need to make great efforts to promote reform of the local financial institutions and encourage social participation in the restructuring of these institutions so that new mechanisms featuring self - discipline and self - development could be fundamentally established to ensure healthy growth of financial business and strengthened financial services to regional economic development. in recent years, rural economic development has set higher standards for financial services. in particular in the west region where the agricultural industry accounts for a large proportion of the gdp, there exists an urgent need to improve financial services in the rural areas. the central government has been standing highly attentive to financial work in the rural area and on many different occasions stressed the need to “ introduce reform and innovation of the rural financial system ”. financial reform in the rural area shall be carried out in line with the local conditions focusing on exploring a new path for the development of rural finance. efforts shall be strengthened to construct a rural financial system with improved functions, rationalized division of labor, clear ownership and effective supervision, and to pioneer in developing new cooperative financial institutions in the rural area as well as an effective business model ensuring combined policy and commercial financial support to rural economic development. in 2003, pilot reform program of the rural credit cooperatives ( rccs ) was conducted in 8 provinces and municipalities. chongqing as one of the municipalities participating in the pilot program has so far made good progress in the reform, creating a sound foundation for future endeavors. with support of the government, the rccs have been released from financial burdens, but this does not mean we have completed the reform. whether we could make further progress in reforming the rccs depends critically on the transformation of the operating mechanisms and the financial sustainability of the rccs. success in these areas holds great significance not only for the viability and development of the rccs themselves, but also for the realization of the broad rural economic development strategy. with regard to supporting economic development in the west region and in the three gorges area, we think that financial support should be tilted towards the development of the small and medium - sized enterprises, particularly those non - public smes, and to the development of the external sector. as many have observed, in the government orchestrated reform process of the large commercial banks and the rccs, the large banks and some medium - sized banks tend to emphasize on their services to the large corporate clients, emphasize on restructuring the used - to - be loose credit management system, and emphasize on

three gorges area. finally, i would like to stress that the receipt of financial resources in a region is closely associated with the condition of its financial eco - system. whether it be development or commercial financial business, a sound financial eco - system is the prerequisite to ensure its success. in recent years, with steady improvement of the internal control and risk management systems, some national banks have started to set up internal ratings system in accordance with stipulations of the basel capital accord ii, and adopted such an approach to assess the condition of financial eco - systems across various regions, so as to guide their exercise in internal fund allocation, credit planning or the authorization of credit lines. this will to a large extent determine the direction and amount of financial resources movement across the regions. in the west region where the industrial foundation is relatively weak and the economic development is backward, greater efforts should be made to improve the local financial eco - system to attract financial resources. of course, backwardness in economic development does not necessarily imply a poor financial eco - system. but if the financial eco - system of the west region could be more effectively improved, it would be helpful to quickly develop a comparative advantage in attracting financial resources to provide sustained credit support to the industrial development and restructuring of the region. in terms of building a sound financial eco - system in a region, apart from the efforts by the central government in establishing a good legal and enforcement system, the local governments should also create a favorable platform to ensure justice of the judiciary system so as to provide better protection for the claims of the financial institutions, improve credit environment and foster a mutually beneficial relationship between the banks and the enterprises. ladies and gentlemen, many issues remain to be deeply studied and deliberated with regard to accelerating financial system reform and giving the financial industry a greater role in resource allocation to more effectively support economic development of the west region and the three gorges area in particular. in this respect, i would like to commend the valuable research and experiments conducted by provinces and municipalities in the three gorges area. i have also read some excellent research papers containing good proposals presented at this conference. i think the financial industry should support the favorable polices tailored by the state to facilitate development of the west region and the three gorges area in a bid to improve financial services to this end. i also believe that under the leadership of the cpc central committee and the state council and with concerted efforts of all relevant parties, the vast west region including