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3.
Over the
past
real GDP has
one and a half decades, China's
been growing strongly, at an average annual
rate of 9%. This remarkable performance has come largely
from realisation of the productive potential unleashed from
the real sector of the economy. Development of the
financial sector, by comparison, is lagging far behind. Both the financial system and the institutional set-up
remain very much in a backward state, and can hardly meet
the requirements of a fast-growing and increasingly open
If not properly rectified and enhanced, this
could seriously constrain the growth potential of the economy in the longer term. Lately, in recognition of this significant drawback, the Chinese government has introduced number of measures with a view to revamping its financial system. However, some of these measures still fall short addressing the fundamental weaknesses, and more needs to
economy.
a
of
be done.
4.
This paper attempts to identify the main structural deficiencies of China's financial system against
its evolution since the late 1970s, and examine the various
measures designed for rectification and enhancement. It remark on the likely implications
concludes with a brief
for the Hong Kong economy.
Overview of main deficiencies in China's financial system
5.
One major deficiency of China's financial system
relates to the rather antiquated institutional set-up of
its banking system, which is inherited from the strictly
centrally planned economy in the pre-1978 years.
People's Bank of China (PBOC) is the central bank in China. But quite unlike the central banks in the advanced
economies such as the Federal Reserve in the United States
and the
monetary
The
in Germany, PBOC has only very few
Bundesbank
policy
tools
at its disposal.
Moreover, its
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