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the money supply, which meant basically control of the currency in circulation given that China was essentially a cash-based economy, was achieved as a by-product of the government's direct control of its own spending and of bank lending.
Re-structuring and reform of China's banking sector since
1979
3.
China's efforts to reform and modernise its
economy started in late 1978, with the adoption of open door economic policies to promote external trade and
foreign investment in China and the use of the market
mechanism and of economic incentives to stimulate domestic
economic activity. The pace of reform accelerated in 1984
when China announced its decision to implement more
fundamental reforms of its economic structure.
:
4.
With the reform measures having succeeded to
some extent in re-vitalizing its underlying potential, the
economy of China has been growing rapidly since 1979 and
is increasingly accepted as an economy possessing great scope for growth and development in the next few decades. But until recently developments in agriculture and industry have not been matched by developments in the
monetary sector.
5.
The banking sector of China remains deficient in two major respects. First, at the macro level, with the banking sector being little more than an extension of the government's fiscal operations, there have been few instruments for the implementation of credit or interest rate policies. Hence, reform of China's banking sector
has become a crucial element in the overall economic
reforms, in order that the Chinese authorities can rely
more on the use of "economic levers" rather than
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