OREANDA-NEWS. Chinese banks play important strategic roles in supporting state policies, but these objectives may come in conflict with banks' profit goals, and this dilemma continues to weigh on their Viability Ratings (VRs), Fitch Ratings says in a new special report.

Authorities frequently use the banks to address systemic risks, reinforcing the banking system's importance to the economy. This importance implies the sovereign (A+/Stable) would have a very high propensity to support the banks. Fitch rates the three wholly state-owned policy banks at 'A+', and the five state commercial banks 'A'. Fitch believes the banks' main source of support in times of need will be the Chinese sovereign, rather than non-sovereign shareholders or local governments, whose abilities to provide direct and timely support to banks are uncertain.

Fitch believes China's practice of bailing out debt-saddled enterprises through banks would delay the nation's bid to develop a more market-driven financial system. This means China will remain a centrally controlled economy despite financial reforms and effort at rebalancing the economy that had implied a greater role for market forces.

The full report is available on www.fitchratings.com.