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China's Banking Reform: The Remaining Agenda

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  • Charles Kwong

Abstract

Since 1994, China has endeavoured to establish a banking system that works more closely to commercial principles by transforming the specialized banks (SBs) into state-owned commercial banks (SOCBs). However, lending decisions of the SOCBs were still determined by state directives instead of profitability consideration. This paper argues that although the post-WTO banking reforms have accomplished staggering results, China's SOCBs need an overhaul of ownership structure if China aims to develop a full-fledged market-based banking system. It also argues that the current banking reforms are not comprehensive enough to sustain China's long-term economic development because there still remain noticeable capital constraints facing small- and medium-sized private enterprises, particularly those in rural areas.

Suggested Citation

  • Charles Kwong, 2011. "China's Banking Reform: The Remaining Agenda," Global Economic Review, Taylor & Francis Journals, vol. 40(2), pages 161-178.
    • Handle: RePEc:taf:glecrv:v:40:y:2011:i:2:p:161-178
    DOI: 10.1080/1226508X.2011.585056
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    References listed on IDEAS

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