China's Banking Reform: The Remaining Agenda

Charles Kwong

Global Economic Review, 2011, vol. 40, issue 2, 161-178

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.

Keywords: Chinese banks; state-owned commercial banks (SOCBs); banking reform; ownership reform; rural finance (search for similar items in EconPapers)
Date: 2011
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DOI: 10.1080/1226508X.2011.585056

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