by sub - industries, such as agricultural and animal husbandry, textile, light industry, machinery, and so on. they were in charge of import and export of their respective sub - industry and adopted different financial rules. there was no competition among the companies. in order to attract foreign investment, china introduced the first sino - foreign joint venture law in 1979, after which domestic companies competed from foreign companies and industry segmentation and monopolies began to fall apart. competition has driven the soes to make great progress. industries with more sufficient opening - up and fiercer competition have developed more rapidly. the manufacturing industry has flourished. 1 / 4 bis central bankers'speeches 2. opening - up has promoted domestic policy reform the opening - up has strongly impacted the traditional centrally planned policy making system, and triggered a series of major domestic reforms, including pricing system reform, value - added tax reform, export tax refund reform, market - based exchange rate regime reform, and negotiation for accession to gatt and wto. in the early 1980s, in order to attract foreign investment, the domestic policy system must move more closer toward the market rules and provide a level playing field. subsequent consideration was to make sure chinese enterprises compete fairly in the international market. fair competition and opening - up are inter - connected. it involves not only competition between chinese and foreign - funded companies, but also equal and adequate competition among chinese companies. opening - up accelerated the access of domestic private capital, and subsequently brought in the concept of national treatment. market access criteria should be the same for domestic and foreign - funded companies. the opening - up facilitated three major policy reforms, i. e., trade and investment liberalization, market - based exchange rate regime reform, easing of exchange control, including lowering the market access threshold. as a result, competition and market gradually became generally applicable policy mechanism. 3. service industry has opened up in a similar process in the past, economists treated the service industry as a non - tradable industry. however, with the rapid progress of information technology, transportation and globalization, many services became tradable. people began to say that “ the world is flat ”. the opening - up of the service industry in china followed a similar pattern of the manufacturing industry : opening - up brought in competition, boosted efficiency and quality of service, and facilitated domestic policy reform. in the industrial field, the market competition rules are not applicable to a very small number of industries such as defense industry,

##utely resolved risks of some high - risk financial holding groups, intensively rectified the financial order and conducted the special program on addressing internet financial risks. financial institutional reform continuously deepened remarkable achievements have been made in the reform of large state - owned commercial banks. in 1979, in order to support “ loans for government grants ” reform, the central government established various state - owned specialized banks, gradually discarded the division of work among these banks, split off their policy - related businesses, and transformed them into market 2 / 11 bis central bankers'speeches competitors. however, due to deficiencies in financial standards and rules, imperfect corporate governance structure and inadequate capital, as well as the impact of the 1997 asian financial crisis, there was a massive build - up of non - performing loans in the banking sector. at that time, some scholars at home and abroad believed china ’ s large state - owned commercial banks were on the brink of “ technical bankruptcy ”. in response, the chinese government issued special treasury bonds and established four asset management companies that specialized in receiving and disposing non - performing loans of rmb 1. 4 trillion hived off from state - owned commercial banks. however, deeper reforms like the institutional reform of large state - owned commercial banks remained untouched. in february 2002, it was clarified at the second national financial work conference that large state - owned commercial banks should be transformed into joint - stock companies and those with appropriate conditions could get listed. in 2003, the central government decided that the pbc should take the lead in researches on the reform of large state - owned commercial banks. the pbc then proposed creatively to inject the state ’ s foreign exchange ( fx ) reserves into large commercial banks, and designed a four - step reform program which included writing off actual capital losses, splitting off and disposing of non - performing assets, injecting fx reserves and getting listed on domestic or foreign markets. in september 2003, upon the deliberation and approval of the cpc central committee, the state council approved the general plan for transforming large state - owned commercial banks into joint - stock banks, of which the drafting was led by the pbc. according to the plan, bank of communications ( bocom ), china construction bank ( ccb ), bank of china ( boc ), industrial and commercial bank of china ( icbc ) and agricultural bank of china ( abc ) successively underwent shareholding reforms, stripped off non - performing assets, significantly shored up