Banks need to be on guard

The sound performance of Chinese banks last year must have made them the envy of much of the world. But the real test for them is yet to come as the global financial crisis worsens and domestic economic growth slows this year.

The message that Liu Mingkang, chairman of the China Banking Regulatory Commission, delivered at a press conference yesterday is reassuring. While encouraging credit expansion to support the country's stimulus package, the banking regulator also urged domestic lenders to improve risk management.

Such a sober regulatory mind is much needed to help sharpen Chinese banks' long-term competitiveness. The strong fundamentals of the Chinese economy have indeed laid a solid foundation for domestic banks to thrive, but they can succeed only by making risk control a top priority.