Abstract: The development of private banking is currently a hotspot and a difficult problem in the reform of China’s banking sector. Although China’s state-owned banks have laid a solid foundation for the financial system, it is hard for the state-owned banking system to continue to support China’s difficult transition of “structural adjustment” due to lacking of competition and fairness currently. Therefore, to evaluate correctly the contribution made by state-owned banks to China’s economic growth not only has a strong practical significance, but also is helpful to analyze more accurately the comparative advantages and disadvantages of private banks. This study shows that only by making a good top-level design for the development of private banks, optimizing the overall financial ecological environment in the society and effectively guarding against financial risks, can a healthy and competitive banking system be constructed in the true sense.

Key words: state-owned banks; institutional transition; private banks