Put the cart behind horse

According to the China Banking Regulatory Commission, the total net profits of Chinese commercial banks hit 1.04 trillion yuan ($165 billion) in 2011, a 36 percent increase year-on-year. Seven mainland banks rank among the world's top 10 most lucrative banks.

The banks' dazzling financial record is based on their domination of the national financial system and their control of the interest margins between their deposits and loans. Profits from these interest margins accounted for more than 80 percent of the Chinese banks' total net revenue, much higher than the international average.

The loan interest rate is allowed to float in response to market changes to some extent, but the deposit interest rate is still completely controlled by the central bank, resulting in even negative interest rates for depositors. The benchmark rate for one-year deposits is 3.5 percent, but 6.56 percent for one-year loans.