China has chalked up a remarkable achievement in reforming its banking industry, said Vice Chairman Tang Chuangning of the China Banking Regulatory Commission here Sunday.

"The successful reform of China's state-owned commercial banks has greatly improved the international image of Chinese banks," he said at an annual meeting on Asian finance in the 21st century.

After the successful IPOs (initial public offering) of the Bank of Communications and China Construction Bank in 2005, the Bank of China and the Industrial and Commercial Bank of China successfully listed on the Hong Kong and Shanghai stock markets this year, he said.

The Industrial and Commercial Bank of China, the biggest company on China's A-share market, created the world's largest IPO, he said.

In previous decades, Chinese banks piled up a mountain of bad debts as a result of reckless, government-ordered lending to state-owned enterprises.

Almost all major Chinese banks have formulated plans to become joint-stock companies and seek market listing to help streamline operations.

In line with a WTO (World Trade Organization) commitment, China will fully open its financial markets to foreign competition by the end of this year.

"The joint-stock reforms have spurred Chinese banks to improve their corporate governance, risk management and internal controls, and their financial, debt and human resource management," Tang said.

The capital adequacy ratios of 10 listed commercial banks now exceed 8 percent, according to Tang, who also mentioned progress in reforming credit cooperatives in both urban and rural areas.

China is well on the way to fully opening its banking sector, he said. By the end of September 2006, over 70 foreign banks from 22 countries had set up 252 subsidiary banks and sub-branches as well as 242 operational organizations and representative offices in China, and their assets accounted for 2 percent of the total assets of the Chinese banking industry.

A total of 18 overseas strategic investors have bought in to twenty-five Chinese commercial banks, providing equity worth 18.1 billion U.S. dollars, according to Tang.

The government will lift restrictions on Renminbi and foreign-currency transactions by solely foreign-funded banks and Sino-overseas joint venture banks when the new regulations on foreign-funded banks come into effect on December 11.

The situation is different for Chinese branches of foreign banks. Apart from exceptional cases where an individual, having obtained the approval of the banking regulatory body, makes a fixed deposit of no less than one million yuan (127,000 U.S. dollars), Chinese branches of foreign banks are banned from offering Renminbi services to Chinese citizens.