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A Retrospect on China's Banking Reform


  • Wai Chung Lo


China's banking system has undergone substantial changes in the past two decades, and it has been transformed from an institutional setup for central planning to a banking system in a market-oriented economy. The reform strategy is consistent with the overall economic reform in China, which, unlike many transitional economies in Eastern Europe, has taken a gradual or incremental approach. This approach enables the banks in China to progress in phases from the accounting units of the central planner to a modern commercial banking system consistent with the price system which aims at efficient allocation of financial resources. The first phase of the reform (1978-92) created a banking system that was oriented to a market economy but imprinted with the legacy of central planning. The second phase of reform (1992-present) has removed the remnants of central planning and established a full-fledged modern banking system. The purpose of this paper is to delineate the banking reform's gradual approach, with the focus on the achievements and problems of each stage.

Suggested Citation

  • Wai Chung Lo, 2001. "A Retrospect on China's Banking Reform," Chinese Economy, Taylor & Francis Journals, vol. 34(1), pages 15-28, January.
  • Handle: RePEc:mes:chinec:v:34:y:2001:i:1:p:15-28

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    Cited by:

    1. Chan, Kam C. & Fung, Hung-Gay & Thapa, Samanta, 2007. "China financial research: A review and synthesis," International Review of Economics & Finance, Elsevier, vol. 16(3), pages 416-428.
    2. Charles Kwong, 2011. "China's Banking Reform: The Remaining Agenda," Global Economic Review, Taylor & Francis Journals, vol. 40(2), pages 161-178.
    3. Bayraktar, Nihal & Yan Wang, 2004. "Foreign bank entry, performance of domestic banks, and sequence of financial liberalization," Policy Research Working Paper Series 3416, The World Bank.

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