Banking for public finance: struggling for a balance

Hui Feng

Chapter 4 in Handbook of Public Finance in China, 2026, pp 67-80 from Edward Elgar Publishing

Abstract: This chapter examines the evolution of the relationship between banking and public finance in the context of China's transition from economic planning to a more market-oriented economic system. As the central bank endeavours to establish its policy credibility and the commercial banks transition to market entities, both have struggled to walk a fine line under political pressures from the government in financing budgetary obligations. This has been further complicated by bureaucratic politics at the central level between the central bank and treasury, and at the local level between commercial banks and local governments. Despite a series of legal and institutional reforms, the banking system remains a contingent fiscal agent of the government, which creates and amplifies risks to the macroeconomic safety and stability.

Keywords: Public finance; Banking; Banking reform; Fiscalisation; Bureaucratic politics (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035311705
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