China will allow foreign-funded banks to conduct Renminbi business for Chinese citizens before Dec. 11 in line with its commitments to the World Trade Organization, said Song Dahan, deputy director of the Legislative Affairs Office of China's State Council, on Nov.16.

    The government would also remove regional restrictions and other limits on foreign-funded banks, giving them the same treatment as Chinese banks, said Song at a press conference on China's new regulations on foreign-funded banks.

    According to the regulations issued Wednesday, Chinese branches of foreign banks remain banned from engaging in Renminbi services with Chinese citizens unless an individual, with the approval of the banking regulatory body, makes a fixed deposit of a minimum one million yuan (127,000 U.S. dollars).

    The government will encourage and guide foreign banks to transform their branches into or set up incorporated banks registered in China, which will enjoy the benefits of the country's banking sector, said Song.

    He said that the banks would be supervised by the Chinese banking authorities to minimize risks and ensure domestic financial stability.

    Foreign banks with Chinese corporate status can issue Renminbi credit cards, said Wang Zhaoxing, assistant chairman of the China Banking Regulatory Commission (CBRC).

    He also encouraged foreign financial institutions with good credit to buy shares of Chinese commercial banks.

    "The opening of China's banking sector is comprehensive and all directional," said Wang.

    Since joining the World Trade Organization in 2001, the country has seen the number of foreign-funded banks growing and their business scope expanding, said Song.

    China has fully opened its foreign exchange business to foreign-funded banks and allowed 111 foreign financial institutions to offer Renminbi services for Chinese and foreign enterprises in 25 cities.

    The CBRC data show the assets of foreign-funded banks in China totaled 105.1 billion U.S. dollars in September, accounting for 1.9 percent of all banking institutions in the country.

    Since 2001, China has taken a series of measures to gradually open its financial markets, including the introduction of the QFII (qualified foreign institutional investors) scheme in 2003 to allow foreign institutional investors such as UBS, Deutsche Bank and Citigroup Global Markets Limited to engage in the securities sector on the Chinese mainland.

    In order to cope with competition from foreign banks, the country has initiated reforms of its state-owned banks which had high non-performing loan ratios.

    Three of its four largest state-owned commercial banks are now listed on the stock market.