It is fitting that this is the year of the monkey, as China will need to be agile and quick if it is to fix up its shaky banking system. At stake is the survival of its half-reformed state banks, which will have to be ready to compete on an equal footing with foreign banks by 2007.
By then, China’s commitments to the WTO require it to dismantle the remaining barriers that have kept largely intact the monopoly of its state banks since 1949. In recent years, it has opened up the market in small measured steps, restricting the market share of foreign banks to less than 8%.
