Banking Reform in China: An Assessment in Macroeconomic Perspective
China has been delaying its adoption of a flexible exchange rate system with free capital flows. The main excuse is that its financial sector is still in its fragile stage and is not able to withstand any external shocks. A big bang approach towards such liberalization will only lead to financial crisis as observed by experiences of many Asia-Pacific countries during the Asian Financial Crisis. With this in mind, this paper attempts to uncover the approach and strategies adopted by China in its banking reform since 1978 and then assess these reform measures in macroeconomic perspective. The paper argues that since China is still lingering on export-oriented strategy in promoting economic growth and monetary independence for demand management is still a long way to go, it is still in China’s best interest not to adopt a flexible exchange rate system at this point of time. As to capital account liberalization, the main focus is to engineer a controlled and systematic capital outflows through outward investment in particular portfolio investment. At the micro level, China should continue its banking reforms until the financial sector is strong enough to withstand the severe pressure of globalization. By then, will China, with its matured financial system be ready to consider the adoption of a flexible exchange system with free capital flows.
|Date of creation:||Jul 2007|
|Contact details of provider:|| Postal: Nanyang Drive, Singapore 637332|
Fax: 6795 5797
Web page: http://egc.hss.ntu.edu.sg/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- M. Ruth & K. Donaghy & P. Kirshen, 2006. "Introduction," Chapters, in: Regional Climate Change and Variability, chapter 1 Edward Elgar Publishing.
- Nikolay Nenovsky & S. Statev, 2006. "Introduction," Post-Print halshs-00260898, HAL.
- Liu Junning, 2001. "The New Trinity: The Political Consequences of WTO, PNTR, and the Internet in China," Cato Journal, Cato Journal, Cato Institute, vol. 21(1), pages -, Spring/Su.
- Alicia García-Herrero & Sergio Gavilá & Daniel Santabárbara, 2006.
"China's Banking Reform: An Assessment of its Evolution and Possible Impact,"
CESifo Economic Studies,
CESifo, vol. 52(2), pages 304-363, June.
- Alicia Garcia-Herrero & Sergio Gavila & Daniel Santabarbara, 2005. "China’s banking reform: An assessment of its evolution and possible impact," Finance 0508010, EconWPA.
- Alicia García-Herrero & Sergio Gavilá & Daniel Santabárbara, 2005. "China's banking reform: An assessment of its evolution and possible impact," Occasional Papers 0502, Banco de España;Occasional Papers Homepage.
- Krugman, Paul, 1979. "A Model of Balance-of-Payments Crises," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 11(3), pages 311-325, August.
- repec:sae:ecolab:v:16:y:2006:i:2:p:1-2 is not listed on IDEAS
- Barbara Casu & Claudia Girardone, 2009. "Integration and Efficiency in EU Banking Markets," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
- Richard Podpiera, 2006. "Progress in Chinaâ€™s Banking Sector Reform; Has Bank Behavior Changed?," IMF Working Papers 06/71, International Monetary Fund.
- Genevieve Boyreau-Debray & Shang-Jin Wei, 2005.
"Pitfalls of a State-Dominated Financial System: The Case of China,"
NBER Working Papers
11214, National Bureau of Economic Research, Inc.
- Boyreau-Debray, Genevieve & Wei, Shang-Jin, 2004. "Pitfalls of a State-Dominated Financial System: The Case of China," CEPR Discussion Papers 4471, C.E.P.R. Discussion Papers.
- repec:cto:journl:v:21:y:2001:i:1:p:13-18 is not listed on IDEAS
- Richard Lung & Dan Fineman, 2005. "Foreign banks' new China strategy," Asia Focus, Federal Reserve Bank of San Francisco, issue Jul, pages -.
When requesting a correction, please mention this item's handle: RePEc:nan:wpaper:0707. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Magdalene Lim)
If references are entirely missing, you can add them using this form.