There might be some speculative funds betting on the yuan appreciation, or the so-called "hot money" flowing into China, but the amount was "not big", central bank governor Zhou Xiaochuan said here Monday.

The reason is that China now still implements foreign exchange controls to some extent, he told a press conference during the annual session of the National People's Congress, China's parliament.

China's forex reserve, which rocketed to 609.9 billion US dollars -- second only to Japan -- at the end of 2004, consist largely of trade surpluses, non-trade surpluses and capital investment from overseas, said Zhou, governor of the People's Bankof China.

As a matter of fact, the reserve started to surge not in 2004, but as early as 2002, on the backdrop of China's economic start-up following the Asian financial crisis, he said.

Forex reserve should be denominated in a number of currencies (instead of the US dollar alone) and comprise diversified products in a bid to award off risks, Zhou said in reply to a German reporter's question on whether China would hold more euro-denominated assets.

"We have long attached importance to the holding of a certain amount of euro assets," the central banker said.

State banks to go public soon

The top banker also revealed that the planned share-offerings and listings of state-owned Bank of China (BOC) and China Construction Bank (CCB) are "not too far away".

The banks' stock market debuts should be decided by their boardof directors and depend on whether there are "windows of opportunity" on the capital market, he told a press conference during the annual session of the National People's Congress (NPC).

The banks were also consulting overseas and domestic investmentbanks, their financial advisers and accounting firms regarding thetiming, Zhou added.

Both the BOC and CCB have completed financial reshuffle and need to strengthen corporate governance and push on some internal reforms, he said.

The BOC and CCB, considered as financially healthier banks among China's Big Four that also include the Industrial and Commercial Bank of China (ICBC) and Agricultural Bank of China (ABC), are leading the government's latest, aggressive reform in the vital financial system.

They received a combined 45 billion US dollars in foreign exchange reserves at the end of 2003 from the central government aiming to bolster their balance sheets.

The bailout package has helped the BOC and CCB raise their capital adequacy ratios (CARs), being a measure of their available capital in proportion to their outstanding loans, to 8.62 and 11.95 percent, respectively, by the end of 2004.

The BOC's and CCB's non-performing loan (NPL) ratios plunged to5.12 and 3.7 percent, respectively, by the end of last year, according to a report delivered at the press conference.

The banks have both become joint-stock firms with a governance structure featured by a shareholders' meeting, board of directors,board of supervisors and senior management, which have all startedoperation.

The BOC has done away with all government ranks of its staff, urging its 230,000-strong employees to vie for new jobs in the bank.

A new company, the Central Huijin Investment Co., was inaugurated as major shareholders of the two banks to supervise their restructuring. It is managed by former department heads of the People's Bank of China with a board comprising representativesfrom the State Administration of Foreign Exchange, Ministry of Finance and the central bank.

On Monday, Zhou Xiaochuan also revealed reform of the other twobig state banks -- the ICBC and ABC -- "will also advance in a similar direction".

"We should say that joint-stock reform of the ICBC and ABC willbe carried forward on the back of progress and experience achievedon the BOC and CCB."

He gave no details about whether the state would also inject hefty funds into the ICBC and ABC. "Different banks will be given different policies," he said.