Vice-Premier Li Keqiang and other senior officials meet representatives of Bank of China at a ceremony marking the bank's 100th anniversary in Beijing on Friday. Li said China will continue its policy of opening up to the outside world and encourage its enterprises to compete equally in the process. [Photo / Xinhua]

Vice-Premier Li stresses equality and expanding domestic demand

BEIJING - China will continue its policy of opening-up to the outside world and encourage its enterprises to participate in equal competition in that process, Vice-Premier Li Keqiang said on Friday.

He said the world's second-largest economy will implement a "proactive" strategy to promote further opening-up, and allow the market to play a bigger role in the economy as reforms have just entered a critical zone where "no progress means retreat".

"Financial and other types of enterprises should seek opportunities and participate in competition on an equal basis during the opening-up," Li said, adding that both Chinese and foreign companies will benefit from such equal competition.

Analysts said China could further open up its economy on the three fronts of trade, investment and finance.

"The basis of China's strategic development is still to expand domestic demand, as the country is undergoing accelerating industrialization and urbanization," Li said.

"China will continue to make more efforts to encourage domestic enterprises to go overseas," said Wang Haifeng, director of international economy at Institute for International Economic Research, a think tank under the National Development and Reform Commission.

Zhang Yongjun, researcher at the China Center for International Economic Exchanges, said Li's speech implied that the government probably will put more attention on facilitating enterprises that are heading for overseas markets and becoming multinational groups so they can more closely connect with the world.

The debt crisis in the West has led to a contracted value of Western enterprises and it could provide a good opportunity for Chinese firms to expand their international presence.

Vice-Premier Li said that the ongoing changes in the world economic landscape amid global turmoil have provided huge potential for China to develop into an open economy, and enterprises will play a key role in that process.

He made the remarks at a ceremony marking the 100th anniversary of Bank of China (BOC) in Beijing.

He said BOC is a symbol of China's opening-up, and financial institutions should play a greater role in supporting the real economy - which produces goods and services - and facilitating more successful Chinese enterprises to explore the international market. "The real economy and the sustainable growth of the financial sector are mutually dependent."

"The history of BOC illustrates that the real economy is the solid foundation of the development of financial institutions, especially the commercial lenders," said Xiao Gang, board chairman of BOC.

"Now we are facing great business opportunities as enterprises go abroad. We will take root in China's economy and the demand of domestic clients, while establishing a large international banking group carrying cross-border advantages," he said.

Premier Wen Jiabao also sent a letter to BOC to mark the anniversary. He encouraged the bank to keep improving its service to make more contribution to the country's economic development.

As one of the four biggest State-owned commercial lenders in China, BOC is the only Chinese bank that has operated continuously for 100 years.

In early November, it was selected as a systemically important global financial institution by the 20 Group executive body of the Financial Stability Board - the first time that a commercial lender from an emerging market has joined the "too big to fail" club.

The market leader of the cross-border yuan settlement business announced earlier that the amount of such settlements it processed in 2011 exceeded 1.7 trillion yuan, among which its mainland operations accounted for about 780 billion yuan.

BOC (Hong Kong) Ltd has handled business of more than 550 billion yuan as a participating bank, and the other overseas institutions processed more than 430 billion yuan.

BOC (Hong Kong) Ltd and its branch in Macao were appointed by the central bank as the only yuan-clearing bank in the two special administrative regions.

"The Bank of China and its subsidiary BOC (Hong Kong) will continue to play their vital roles in the yuan internationalization process," said Linus Yip, chief strategist at First Shanghai Securities Ltd.

"As the central government will continue to support Hong Kong as the testing ground for yuan internationalization, BOC (Hong Kong) can leverage its unique advantages to consolidate its leading role in the offshore yuan businesses in the city. BOC (Hong Kong) still possess competitive edges in this regard."