According to the reform blueprint published following the Third Plenary Session of the 18th Communist Party of China Central Committee, authorities will further open the country's financial sector to investors; and under strengthened supervision, qualified private investors will be allowed to set up small- and medium-sized banks and other financial institutions. Since the release of the document, many private groups have expressed interest in entering the banking industry.

At present, private capital accounts for 5.29 percent of total capital in China's five biggest commercial lenders; while with the country's 12 joint-stock banks, 144 city commercial banks and all rural financial institutions nationwide, private ownership now stands at 41 percent, 54 percent and 90 percent respectively.

It's something of a misunderstanding to say that private capital has, until now, been kept out of the banking sector. But the difference this time is that private investors will now be allowed to establish their own institutions - this marks a clear breakthrough for the sector.

The author is Yang Kaisheng, former president of Industrial and Commercial Bank of China.

caixin.com