Chinese Premier Wen Jiabao aims to break the state's grip on bank lending because the flow of private capital needed to be "eased," according to comments published on the China National Radio website Wednesday.

"In regards to financing costs, let me honestly say that our banks are making a profit too easily. It's because a few big banks are in a monopoly position," he is quoted as saying.

Bemoaning that it was only through these banks that the Chinese "successfully get loans," Wen highlighted the need for "breaking up" the monopoly to facilitate private bank lending.

Wen's remarks have come after private business owners have increasingly complained about being rejected by major banks, which favor other state-controlled enterprises as their debt is guaranteed by the government.

Shadow banking on the rise

Wen also highlighted experimental reforms recently introduced in the eastern city of Wenzhou aimed at helping struggling private firms.

They included incentives for state-owned banks to lend more to small firms, as well as allowing private companies to issue corporate bonds to ensure funding.

Calling for the changes to be "expanded nationwide," Wen might hope to ease the financial woes of private businesses unable to repay crippling debts as the economy slows.

The crisis has focused attention to the flourishing underground lending sector in China, offering money at higher interest rates for private business owners who were rejected by state banks.

Meanwhile, China has also moved to lower banks' reserve requirements in efforts ease lending as economic growth dwindles.

Wen says he is eager to avoid a "hard landing" for the world's second biggest economy as key export markets in Europe and the United States are shrinking.

uhe/sgb (AFP, dapd, Reuters)