Q.F. 326
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Conclusion
24
52.
Economic reforms in China have so far not been
matched adequately by re-structuring and reforms in its
banking system. This has become an obstacle to more comprehensive and fundamental economic reforms.
53.
China has been devoting increasing attention to
improving the functioning and efficiency of its banking sector. Recently, the raising of capital outside the banking sector through issuance of stocks and bonds has also accelerated. This has opened a new channel for
mobilizing surplus funds in the private sector. However, unless and until China's banking sector develops some
degree of sophistication, the development of financial instruments of this nature, if carried out hastily, may
have adverse implications for China's financial sector as
a whole. In view of the serious structural defects in
China's banking sector, it might actually help matters if foreign banks were allowed to compete more freely with
local banks for some or all types of banking business in China. External stimulus could speed up the
transformation process badly needed by China's banking
sector. However, given the inexperienced and
unsophisticated nature of this sector at present, it may not be strong enough to survive such competition.
54.
Business opportunities in China are expected to provide an important impetus to the growth and development
of Hong Kong's financial sector for the foreseeable future. With the continuing development of Tokyo into an
international financial centre, the main role of Hong Kong's financial sector in the longer term is expected to
be more in the regional than in the global context. The China dimension is likely to feature prominently in
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