With China's impending entry into the World Trade Organization (WTO), China's financial industry will face new challenges brought by financial globalization.

At this crucial moment, China will speed up the reform of the banking system and the capital market. Dai Xianglong, governor of the People's Bank of China, said Sunday.

The emphasis of China's financial reform will be laid on deepening reforms of the four largest state-owned commercial banks.

China plans to turn the four banks into large modern commercial banks in the coming five years or more which will be competitive in the international financial market , the central bank governor said while addressing the 2001 annual meeting of China Development Forum.

To realize this goal, beginning this year, all-round reforms will be carried step by step in the Industrial and Commercial Bank of China, China Construction Bank,

Agricultural Bank of China, and Bank of China in accordance with the requirements for the establishment of modern enterprise system, he said.

Meanwhile, China will continue to standardize and develop joint- stock commercial banks, encouraging them to merge and restructure according to the market principle to form small and medium-sized investment firms, he said, adding that this will help to develop small and medium-sized enterprises.

In addition, more foreign banks will be allowed to operate in China, he said.

He pointed out that during the "Tenth Five-Year Plan" period, China will continue to develop the stock market, to manage the stock market in accordance with the guidelines of" management by law, regulation, self-discipline and standardization" and the principle of market-oriented; speed up the construction of the second board market while improving the main board market and gradually open up the financial derivative product market; to further standardize securities firms and listed companies and protect the legal rights and interests of investors in real earnest; actively develop institutional investors; further promote the market-orientation of stock issuance mechanism; expand the foreign investment fields, study the methods for the management of the purchase of non-performing assets of financial assets management companies by domestic and foreign investors; explore the possibility of the establishment of foreign-funded or Sino-foreign joint venture west development bank, the governor said.