China's State-owned Commercial Bank Corporate Governance Reform Its Ways

The reform of China's state-owned commercial banks oriented market is an arduous work. Many policies have been implemented to improve the management of the state-owned commercial banks. This paper focuses on the corporate governance of state-owned commercial banks. The internal conditions indicate that many defects of governance, for example, the state-owned ownership system, the risk of agent-principal, the inefficiency of audit mechanism and incentive-constrained system remains to be solved. Good corporate governance is essential to modern commercial bank, so the reform of governance should be core of the whole reform. With the entry to WTO and the forthcoming influx of foreign banks , the state-owed commercial banks are confronted with formidable challenge which have not appeared ever before. In order to improve corporate governance mechanism, strengthen risk management and internal control, the state-owned commercial banks pushed ahead joint-stock reform and three state-owned commercial banks had successfully gone public, turning a new chapter in history. But the listing of state-owned commercial banks is the first step to establish the modern corporate governance, we must strengthen the reform forward in becoming a modern commercial bank with good corporate governance practices, such as improving the internal management, establishing a scientific mechanism , detailing the rules of " shareholders meeting, board of directors, board of supervisors", increasing the efficiency of audit mechanism and incentive-constrained system, strengthening the effects of Central Huijin .On the other hand, concerning the external conditions, it is necessary to improve the government's regulation capability. The final goal is to establish the modern corporate governance with Chinese characteristics.