The CCB has reshuffled its ownership structure in line with that of a public enterprise. It has carried out financial restructuring, multiplied shareholders, introduced foreign strategic investors and initially established a modern corporate governance system. CCB’s new diversified ownership ensures clear property rights. It has formed a board of directors consisting of representatives of various investor groups. The board will guide the bank’s management and sever the connection between the bank and local governments.

The stock debut of CCB also ushered the marketization and internationalization-oriented reform of the Big Four to a new stage. In the shareholding reorganization of the banks, foreign strategic investors will play an important role. The injection of foreign capital will put domestic banks under the supervision of both domestic and foreign investors. Currently, the biggest problem in state-owned banks is the lack of credibility and the inability to evaluate credit risks correctly. And this is exactly the area in which overseas banks have excelled in the past decade. For instance, from 1997 to 2003, despite a difficult time facing Hong Kong, its banks did not suffer big risks. On the contrary, their stable and sound operation gave a strong push to the rejuvenation of the Hong Kong economy.

With the listing now, CCB should not only make its operation and information transparent, but also benchmark its operation, performance and profitability against international standards. To take an example, when there is overproduction in industries, some domestic banks tend to tighten loans. But lenders with sound operational systems will conduct comprehensive risk management and adjust the return on capital by finding a balance between risk and return and the long and short term.

Flotation alone will not eliminate all deep-rooted problems of CCB. It is possible that the bank will follow in the footsteps of some so-called listed companies, which claim to be public but actually seek money from the securities market. Even so, joint-stock reorganization and going public are still the most economical and efficient ways to vitalize the bank, as well as the other three of the Big Four.

Two problems remain to plague China’s banking reform: an underdeveloped credit system and credit culture and slow progress in market-oriented operations. These problems cannot be resolved overnight by a single bank being listed or reformed. Take the bank interest rate reform for example. Though the central bank relaxed controls on commercial banks’ lending rates on January 1, 2005, few banks reacted fast enough to the policy adjustment.

The listing of CCB is just the first step toward developing into a rising commercial bank with strong growth momentum. Investors will now be able to track if the bank is achieving its stated goals. If not, they can easily withdraw their money.

Despite challenges ahead, the listing of CCB is a big event in the domestic banking reform effort and also a milestone in restructuring the Big Four.

The author is Director of the Financial Development Division, Institute of Finance and Banking, Chinese Academy of Social Sciences.